Array Management Group

Posts Tagged ‘Turnkey Property’

Buying real estate in low income neighborhoods can be beneficial to investors as they can provide high yields for a low initial investment amount.  So lets say you’ve found a property in a low income neighborhood and as a result of due diligence you realize the property is in excellent condition and will bring positive cash flow. Now the question is: Should I buy it?

Before you do, consider these tips and determine whether or not they apply to your potential investment property.

This article is not about how to find deals in today’s market. Anyone with a pulse can find an undervalued property in this current real estate environment. This section outlines guidelines and potential warning signs when purchasing real estate in low income areas.

1. Invest in areas that are in close proximity to schools, shopping centers, and highways.

2.  As a general rule, don’t purchase property with a fire damaged home as a neighbor. Fire damaged homes are  usually slow to sell in this economy due to the large inventory of foreclosures and bank owned properties on the market.  Because cities are strapped for cash, these properties probably won’t be torn down anytime soon.

 3. Too many vacant properties on a block are also a red flag. In this market its hard to avoid vacancies even if the best neighborhoods but try to stay away from situations where vacancies equal occupied homes on a single block.

4. WATCH OUT FOR TRAP HOUSES – A “trap” house is a slang term for a house that has illegal activities. These types of properties can be identified by high traffic volumes in and out of the properties. Trust your gut when looking out for these types of properties. If the area you invest in has lower traffic and a nice mixture of home owners verses renters, you shouldn’t have a problem with trap houses. People who do illegal activities generally don’t target areas where neighbors have pride of ownership.

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Recent leadership changes at GM could ultimately boost Detroit’s local economy and stimulate the job and housing markets.

GM chairman Edward E. Whitacre, the former AT&T CEO will take over as CEO of GM, replacing Fritz Henderson who resigned after 10 months at the helm. The company is now in a position to make some power moves and regain its status as being an industry leader.

If GM increases productivity, jobs should follow. UAW healthcare and wage concessions  could give GM the incentives needed to keep jobs in Detroit. This will help retain and create jobs at auto suppliers, local restaurants, and other small businesses in the area.

 It can also help to revitalize the Detroit Real Estate market. A fresh crop of newly employed people will look for affordable housing in and around their job location. Real estate investors will be an important factor in this equation. Because of the lower wage scale, most workers will only be able to afford homes in moderate income neighborhoods. Also, if gas prices stay at the current levels, many people will prefer to live closer to the workplace. With this in mind investors can target designated investment areas.

 In order for GM to turnaround their fortune, 2 things need to happen.

 1.       Get a Younger and Stronger Management Team

GM has traditionally been a large, slow company that used its size to maintain market share. Younger leadership is needed to bring in new ideas and continue to create products that appeal to a younger demographic. The best companies are the ones that can identify market and technological shifts and quickly make changes.

 2.       Use New Cost  Structures to Make Big Bucks

GM recently exited bankruptcy which is greatly reduced its debt and healthcare cost. There have also been UAW wage concessions which will further allow GM to be more competitive. If sales can increase steadily, GM is poised to be a cash cow in the near future.

Look No Further!

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