NEWBIE OUT OF JERSEY NEEDS HELP
HELLO ALL, I AM A STUDENT OF CARLTON SHEETS AND I NEED TO KNOW IF IT IS A GOOD OR BAD IDEA TO INVEST IN NEIGHBORHOODS THAT ARE "CHALLANGED". I WOULD LIKE TO FIX UP PLACES THAT I CAN RENT OUT. PLEASE ANYTHING THAT ANYONE CAN OFFER WILL BE APPRECIATED
[ Edited by Angelicia on Date 01/31/2003 ]
Angelicia,
Welcome to TCI! I am also in Jersey and I also went through the CS course. "Challenged" areas have many great investment opportunities. I have a property in a challenged area which I have it rented to section 8. You need to screen tenants just as you would in your regular properties. Challenged areas do not always stay challenged. Newark and Elizabeth are great examples of this. A two family house that sold 2 years ago for 185,000 is now going for 280,000. Vacant land went from 60,000 to 120,000 for a 25 x 100 lot. Are you looking to hold or flip? Remember that people in "challenged" areas also need a place to live. For a new investor it is a great place to start.
Repoman
REPOMAN,
THANKS FOR THE ADVICE, I AGREE THAT PEOPLE IN "CHALLENGE" AREAS NEED GREAT PLACES TO LIVE ALSO. THIS IS ALL INCLUDED IN MY "GREAT VISION". BEING SO NEW TO THIS I AM SKEPTICAL. SOME OF THE AREAS I FOUND PROPERTIES IN SCARED ME BECAUSE THE PRICES WERE SO LOW AND YOU KNOW IN NEW JERSEY THAT 15,000 FOR A HOUSE IS OUTRAGEOUS OR MAYBE I AM JUST NIEVE(OR BOTH). ALSO, TO ANSWER YOUR QUESTION; I AM LOOKING TO FLIP SOME AND RENT OUT SOME.
I am just getting into purchasing REI as well. I'm not an expert, but here are my thoughts.
1. Challenged areas often offer the greatest PCF opportunities. The rents are slightly lower, may take more abuse, and may be slightly more difficult to rent. (This is the trend in my area, yours may be different). The difference in price though is about 25% (or more) whereas the difference in NOI seems to be only about 8% lower.
If you're hoping to go in with very little (or no) cash and get a positive cash flow from it, it seems to me that distressed areas are the way to go. So far, I've learned a lot by talking to people in the neighborhoods. Find out what THEY think is the distressed area. Often investors perceive a distressed area to be much larger than the people who live there.
Remember, that eventually you will probably sell it. The area may be the same, better, or worse. As long as you get a positive cash flow, you can tolerate a breakeven sell if that time comes, hopefully worst case scenario. Good advice that I read recently was to "but the worst property in the best area." Something to think about.
hibbie76: great reply!!!
Angelicia,
There are many great opportunities in NJ. I have invested in Union, Essex and now Camden Counties. My best suggestion to you would be to look at areas that you are familiar with. Do your homework. I have messed up and have learned from my mistakes. The greatest thing about this industry is that you never finish learning! You are at the right place here at TCI. Good luck and let me know how you make out!! By the way $15,000.00????? Make sure it doesnt glow in the dark!!
Happy Hunting,
Repoman
hibby and repo,
thank you both for all of your valuable input. i will keep in touch on the progress i make. speak later repoman, have you explored trenton? if so, whats the word?
Angelicia,
There is plenty of opportunity in Trenton! Trenton has great areas, decent areas, not so good areas and war zones. My advise to you....Stay clear of the war zones for a while, if you know what I mean. Remember that challenged areas are great!!! The war zones I'm talking about are beyond challenged. Plenty of great deals in the sorounding towns also. Let me know when you make your 1st offer.
Happy Hunting
Repoman
RepoMan,
The property that was 15,000 had a fire in the living room and i think this is too much for me to handle. I did some more driving thru the city and found a street that was adjacent to brand new town homes but the set of row houses on this street where boarded up but some where lived in. felt like a ghost town. Looks as if it was a war zone in the past but has been revitalized. do you agree with me that this is a great place to see if anyone has aquired these homes and how do i find this out if there is no for sale sign in front. please any comments are greatly apprieciated.
thanks
Angelicia
Andelicia,
Trentons tax collectors office is pretty helpful. Give them a call and get the owners name, address and phone #(if on file). If the property is REO they will provide you with this info also. When you get them on the phone, check and see what the status of the taxes are.
Repoman