Worried about investing in a bad area (buy and hold)

[Alex Silang]

I'm a newbie and 'd like to invest in the city of Worcester, MA, which is about an hour away from home. That's the only way I can make the rent/mortgage ratio work. I've also heard good things from 2 separate investors (one a professional) about Worcester. This is for buy and hold.

Like any city, there are good parts and bad parts. I'm working to determine which part is which. This is from online research, plus from meetups. Some people are saying online that there is a lot of variation within the neighborhoods. It's hard to tell from online posts/forums because the city has a reputation. I can't tell if some of the post I've found are credible.

My question is, where should I draw the line in the sand? Many areas of Worcester have higher crime rates than the US average. I'll be using a management company (I've read a lot of landlords in Worcester are absentee). I'm mostly worried about falling RE values (if my neighborhood goes from okay to bad) and higher maintenance (delinquent rents, more repairs, etc.)

Higher costs might be taken into account with a higher cashflow. I'm just saying I'd be willing to take a haircut in ROI if it meant less risk and less headache.

At what point is a neighborhood "bad" enough that it becomes a major issue? I was thinking - if I'm a good landlord (repairs made in a timely manner, follow laws, don't screw tenants) renting at a fair price in an okay neighborhood, there is nothing wrong with that. And I'm not saying I need to invest in a place where every house is freshly painted. I just don't want to get screwed.

What sort of things should I consider?

[Chris Pastrana]

@Alex Silang

I used to live in New Hampshire but I never really went down to Worcester so I don't know the are to well, except by reputation. I have a quadplex in North Carolina that I landlord and the reputation of the city is similar. Other people may be able to get more detailed about the actual meat of your question since i'm still new to this as well, but I have found that even though my neighborhood is right on the borderline of being in a bad area I'm able to keep the area in decent condition.

I took the time to get to know the local landlords and formed an unofficial 'alliance' with them. We all have similar goals and desires to keep the area clean and in good shape so we put in the time to be visible in the area, cleaned up trash, etc. Add that to tenant selection and and area can be kept nice, or improved. Anyone else have any thoughts?

[Ann Bellamy]

Alex, besides networking at our Worcester Black Diamond event, consider connecting with Worcester Property Owners Assn. which has evidently morphed into masslandlords.net. (no affiliation) The more connections you make, the better.

[Matthew Dovner]

nice to see some fellow MA residents on BP. I'm also looking to jump into multis but agree that the numbers just don't work in the nicer towns. I'm also considering going to a less desirable area but have my reservations.

[Ann Bellamy]

@Matthew Dovner, there are lots of us. Do a search for MA or Massachusetts in the forums and you'll find a bunch. Also set your keywords accordingly. You'll be notified of conversations about MA and can jump in.

[Jim Montville]

@Alex Silang I live in Worcester and your right there are some great areas and some not so great areas. Those areas can change within a few blocks.If your looking towards the more working class areas try the Greendale section or Quinsig Village if you have any specific area in mind let me know and I'll try to help you out.Good luck

[Paul Timmins]

@Alex Silang

Go to IREM.org search for ARM certified property managers. Call 5 ask them what sides of the city they like/dislike and why. Ask what they see them selling for and what expenses are by category. Ask if they know anything coming up for sale.

Worcester is good for student housing rents can be 2-4 times more. Each street is different remember look for a neighborhood not a street.

You might consider south of Boston prices are better and it is closer.

There are REIA club meetings in Rockland and Taunton.

Paul

[Matthew Dovner]

Originally posted by @Paul Timmins:

@Alex Silang

Go to IREM.org search for ARM certified property managers. Call 5 ask them what sides of the city they like/dislike and why. Ask what they see them selling for and what expenses are by category. Ask if they know anything coming up for sale.

Worcester is good for student housing rents can be 2-4 times more. Each street is different remember look for a neighborhood not a street.

You might consider south of Boston prices are better and it is closer.

There are REIA club meetings in Rockland and Taunton.

Paul

Paul,

Do you have any info on those clubs in Taunton and Rockland? I have been looking for something local but the number I have found are disconnected. Thanks a million!

[Paul Timmins]

@Matthew Dovner

EasternMassReia.com for both

[Matthew Dovner]

Went to the website and it doesnt come up. It brings me to a different site.

[Engelo Rumora]

@Alex Silang

IMO you shouldn't get too caught up on the stats and demographics but rather focus on the team you establish on the ground.

These guys will either make or brake your investments. I know of investors doing very well in Detroit for example due to the systems and people they have looking after their investments even tho Detroit has a huge stigma attached to it.

Thanks and have a great day.

[Jay Hinrichs]

@Ann Bellamy

how does one set keywords.. can you give a not so computer savvy old lender a hand :)

[Ann Bellamy]

@Jay Hinrichs

Sure! In the upper right corner of this page, (when you are logged in) under the yellow Podcast banner, is a link that says "My Keyword Alerts". You set keywords according to what you are interested in, and when someone uses that keyword in the forums, you get an email. For example, I use MA, Massachusetts, Boston, etc. I also set my last name, because sometimes people @mention me without properly using the @mention feature. In addition, I set hard money, private lender, etc. I also set Black Diamond as an alert, but for some reason, that one frequently misses alerting me.

If you set a lot of common keywords, you may get overwhelmed. Hard Money is a very popular inquirty, so you get lots of alerts. The number of keywords you can set varies according to your membership level.

Let me know if this makes sense. If you need more help, let me know.

[Shaun Reilly]

Originally posted by @Paul Timmins:

@Matthew Dovner
EasternMassReia.com for both

@Matthew Dovner

The website is:

myeasternmassreia.com

[Engelo Rumora]

@Jay Hinrichs

Hey mate,

The only keyword you need is "Engelo"

hahahahahaha

[Jay Hinrichs]

@? I can find you anytime your all over the world

[Engelo Rumora]

Originally posted by @Jay Hinrichs:

@? I can find you anytime your all over the world

haha

[Kristopher K.]

@Alex Silang , so I can't answer specifically good/bad areas for you because I think everyone's threshold is different. It seems to come down to how much effort for how much return. I think @Jim Montville is right one as far as how things change out there, but also Worcester has a large geographic footprint. It means you have different areas that are good and offer different demographics. @Paul Timmins mentioned student housing. There are a lot of colleges in Worcester, I think some are expanding into different areas which might change the way you look at certain prospects.

Best advice I could give is get connected with some locals, there's a few on BP. Go out and drive it at different times and days. I think your current location could factor in, but not sure. There are parts of Worcester that I did not like growing up, after spending time in and around Boston, those areas aren't so bad to me now and some are even tolerable! ;>

The areas I "browse" now are Greendale, Elm park, Indian Lake, Newton Sq or whatever it is over by Worc State, and Quinsig. (I haven't actually landed any deals out there yet but I will). Every property I've had offers on out there, I've lost out to cash buyers. Personally I see a ton of potential out there for developing my portfolio.

I think with a little study and some driving around, you'll fill in the blanks pretty quickly. Read theT&G too, watch the areas that show up, check out neighborhood groups to see what they are dealing with. It really is like you said, some good and bad. With some work you'll figure it out.

Hope some of this helps.

[Marcia Maynard]

Here is a tip I learned last week from our local fire marshall.... The fire department has a map that shows the location of fires around the city for a specific time period. There is a distinct area of our city the has a greater number of house fires and interestingly the police department crime map overlay indicating high crime rates is almost identical. I already knew the areas of town to avoid after living here for more than 40 years, but the maps confirm it! I would surmise insurance companies know these areas too and factor it into their rates.