Real Estate Investing in Undesirable Zip Codes (Video)
January 25, 2010 by Dan Reedy · 4 Comments
In this episode of Your Real Estate Cash Flow Mentor at Work video, Dan Reedy talks about finding and cashing in on real estate in undesirable zip codes.
Dan
How does one find a tenant for risky neighbors hoods such as the 64130 zip code in KC.
finding tenants in these neighborhoods is still pretty easy. there are still lots of local employers, they are still generally close to public transportation and a lot of these neighborhoods still have the nuclear families with relatives wanting to live near by. the 2 biggest issues with these neighborhoods are these.
1. getting a QUALITY tenant. our screening process is very rigid. we check criminal, credit and rent histories and also screen for sex offenders to help insure the tenant we place has the willingness and ability to pay.
if you end up with a bad tenant you run the risk of taking all of your cash flow for the previous year and spending it on repairs to get the unit back to rental condition.
2. the biggest issue in these neighborhoods is what happens when the unit goes vacant. you have to know immediately when the tenant is moving so you can secure the property to keep it from getting broken into and having your furnace, copper etc… from getting stolen. if you have central air you need to make sure the unit is secure or pay the money to remove it and then reinstall once you get a new tenant. again, you run the risk of having to spend your previous cash flow on repairs etc…
the key is to have a good management company, understand the risks involved and be careful in your property selection.
as i stated in the video there are good neighborhoods within the boundries of undesireable zip codes and there are also risky neighborhoods in the boundries of good zip codes. the key is having someone on your power team that can help you assess the property before purchase and make sure you are making a good buying decision.
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