Rental Property Investor · Los Angeles, CA · Member since 2020 · 29 posts · 20 votes
Hey guys, doing research in a few areas. I see some neighborhoods of properties that are presented to me on realtor crime heat map as a tier 4 (5 being the worst). General areas I've looked in for multiple markets where cash flow is pretty good averaging a C- in crime report. My question is, how do you know if the crime is just not worth it, or if I'm overreacting? I'd love to be in better neighborhoods, but those are a lot harder to find and don't cashflow as well. At the same time, I don't think that I'm buying in completely run down ghetto's either. I guess I just don't know whether or not a deal is worth it because of the crime report. I don't want to pass up on good deals where the crime isn't as bad as it seems. I hope I'm making sense. If someone can shed some light on how I can get a clearer picture and understanding on this I'd appreciate it.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Jonathan Shnoravorian depends on the type of crime. If we are talking gunfire, it is hard pass for me. Random bullets hitting your rental property is going to scare off any decent tenant.
I like to look at it from a practical standpoint. Would I feel safe walking around in the neighborhood during the day time? How about at night time? Taking that to the next level, would I let me my wife or mother walk by herself during the day time? How about at night time? If the answer is no to any of these questions, then who do you expect to rent the property to? You are basically stuck with people who don't care or have no choice due to problems (money, criminal, etc.) People who don't care are probably "rough" themselves.
If you do invest in a neighborhood with crime, try to find a location that is in the path of progress. What I mean is look for signs the neighborhood is improving instead of declining. If you think it will only get worse, there is no reason to invest.
When I look at areas to invest in, I look at the city's growth, plans to improve the area, and how that affects the specific zip code, I am looking at. To give you a specific example, we just placed an offer yesterday on a home that is in a C class area. However, the area is seeing gentrification that will naturally bring in better tenants. "My opinion".
Nothing beats having boots on the ground. I am a firm believer that you should see the home yourself of finding an agent/friend that lives in the area and can visit the property often.
Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes
5y
I pay zero attention to "crime reports" or "heat maps" when investing for cashflow (same goes for school ratings). All of that is baked into the real estate market data - sales prices, average DOM, rent rates, etc. Even if its appreciation you're looking for, you can still see that in the market data (5 year-over-year change in sales price). Now I do have some livability criteria (no long term board ups in the area, etc.) but crime rates themselves don't concern me.
My point is that your opinion of the crime rates in the area (or some random website's rating) doesn't impact the underlying real estate values. Market activity drives the numbers and if enough people are comfortable buying/selling/renting in the area then that is what matters.
Gulf Coast, TX · Member since 2021 · 24 posts · 13 votes
5y
I read that it's a good idea to dig deeper and look into the "types" of crimes in that area because your tenants have to live there so it is good to understand the crimes themselves. For example, are they property crimes, break ins etc.
I look at every location using the DISCERN method. You need to go into a location with eyes wide open to what it is. Most of my rental props have 2-3x the national crime average. Some of them have much higher crime. I look at all the DISCERN factors. However I play the most weight on median household income and population growth.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Jonathan Shnoravorian depends on the type of crime. If we are talking gunfire, it is hard pass for me. Random bullets hitting your rental property is going to scare off any decent tenant.
I like to look at it from a practical standpoint. Would I feel safe walking around in the neighborhood during the day time? How about at night time? Taking that to the next level, would I let me my wife or mother walk by herself during the day time? How about at night time? If the answer is no to any of these questions, then who do you expect to rent the property to? You are basically stuck with people who don't care or have no choice due to problems (money, criminal, etc.) People who don't care are probably "rough" themselves.
If you do invest in a neighborhood with crime, try to find a location that is in the path of progress. What I mean is look for signs the neighborhood is improving instead of declining. If you think it will only get worse, there is no reason to invest.