The Benefits of Buying Real Estate in a Bad Neighborhood

-There is always room for improvement. Good neighborhoods always have the potential to turn sour, while bad neighborhoods could always get better. Prices often reflect the surrounding area, so purchasing a home in an area that could use some improvement could be a good investment.

-If purchasing a rental, cash flow tends to be better when the rental is located in a rougher neighborhood. People who look for properties in this area tend to be long term renters. In “good” neighborhoods, there are fewer prospective renters as those who tend to rent are usually short-term as they often use the time they are renting to look for a home.

-You beat your competition. Landlords who rent homes in rougher areas generally do not maintain their properties as those in nicer areas. If you maintain your properties, you will be able to charge more than the competition as well as blow them away.

-If you are located in a rougher neighborhood, you can propose that your property change will improve the neighborhood and give you a better chance of getting a different zoning. It is harder to make the same argument if you are located in a nice neighborhood.

-You opportunity to buy more homes in a rougher area. If your budget is 500k, you could buy one in a classy neighborhood, or five to sex in a rougher neighborhood.

-Real estate in rougher areas are less affected by changes in the economy.