housing in gang neighborhoods?

Question

So I was watching Gangland on Netflix the other night, and they frequently talk about the territories and neighborhoods that are notorious for gang activity, or where if you turn down the wrong street, there's a good chance you're not coming out alive, etc.

It got me thinking in regards to how housing in those neighborhoods work. I would assume that a lot of those are section 8 or government subsidized housing? But a lot of gang neighborhoods also have lots of single family homes, to where it looks like any other neighborhood to someone unfamiliar with the area.

Does anyone know what kind of realtors would take listings in those neighborhoods, or take buyers through there? Also, are there investors that invest in those areas? Ultimately, someone has to collect rents, evict tenants, fix maintenance issues, etc. It just seems to me that with having to deal with ruthless and highly dangerous gangs, threats of drive by shootings, etc, it wouldn't be worth any amount of money for anyone to either property manage or own any of those properties.

Thoughts?

Al Williamson · Answer

@Yishi Garrard I specialize in investing along the edges of gang neighborhoods. I do not suggest you put your money into them without a very long term plan.

The key is to find the fringe  - and not the fray. The fringe is where the opportunities are.

There are many tips for spotting the fringe but you could start by looking at the litter. When you find a street with significantly less trash on the ground, you will likely have found the neighborhood  fringe and go good place to begin looking for RE investments.

Hope that helps.

James DeRoest · Answer

It's slumlord territory.

You might get rent, you might not, you evict and turn the property over again. It'll never be a nice property, but then - you aren't renting to nice people either. Your business model is feeding off human trash.

In some cases the slumlords have created the situation by never investing in their properties. When that happens you lower your rents to get people into your increasingly substandard properties, which only ever attracts the wrong tenants.

In other cases, it's other landlords that have brought the area down by constantly renting to human trash.

We have a slumlord next to one of our properties - wrong timing last year but we know he's looking to sell the house - but when the current tenant is busted (I check the local jail every evening) then I think we will have to step in and buy the house.

Danny Woodson · Answer

i suggest if you are collecting your rent in those areas you should drive a tank

Charles Worth · Answer

@Yishi Garrard

ha that show is insight into an insane world.

So I have never lived in the areas on that show but I did live in an area with two sides of the track so to speak and spent time on both sides. I can tell you that there are numerous problems you just prob don't think about unless you have seen it.  For instance, in some houses they will hide drugs in the walls so not only did they mess up your house but when the cops come (and they will eventually if they are selling) they completely wreck the house. I have seen it and would hate to be the owner.

In other cases people there might have a large incentive and nothing else to do but be professional tenants. For instance, I read about someone in Newark that has represented himself and can file for free so he has filed motions against every almost every landlord he has had to live rent free and cost them thousands of dollars. He can do that because he has time and does not have money so can file for free while representing himself.

How do people make it work:

1) If you are from the area you can avoid some of the pitfalls and be close enough to your property to head off any major issues. Not everyone is a problem in these areas many are good hard working people so if you are in the community every day you can pick those better and also exert community pressure if there is a dispute (like a church you belong to, etc.)

2) Many owners are slumlords. If you buy a property cheap enough and keep cost really really low than the problems are just a cost of doing business.  I have seen people living in bad conditions but they can't or won't complain because they not here legally, because they don't think they can get another place to live or maybe can't afford to move. Many of these people are the opposite side of the pro tenant in that they do not know their rights.

3) Many people don't make it work but because the properties are so cheap someone will buy them thinking they can make it work. By the time they find out its not really profitable they are stuck and keep going because they don't want to lose the equity they put in.

Hamp Lee III · Answer

Interesting...

I'm originally from Compton, CA and my dad had Section 8 tenants in his investment properties.

He spent thousands after many of them departed to get the rental livable again. But he also had a couple of tenants that caused no issues for over a decade.

This isn't a niche for the faint at heart, and I wouldn't recommend doing it for quick, easy money. You may find that it won't be quick or easy.

I wish you all the best.

Elaine Hester · Answer

So, this is going to sound super nuts to some people, BUT... I'm actually considering buying a (2nd) property that is right smack in the center of Bloods territory. I am doing some research, and therefore came across your post (albeit a number of years later) so I thought I'd comment my experience....

Very long story short as possible; as newbie lenders back in 2019 we lended to a flipper out of Columbus who obtained by wholesale a 4BR house close to downtown and within a short walk of Nationwide Children's Hospital in an area which is going through much gentrification. The flipper, also a newbie it turns out, was so sure he was going to make a fortune off of the sale of the house with little effort, frivolously spent the money we loaned him to flip and ended up underwater and unable to sell the house for his asking price. We then acquired the house under deed in lieu and finished the remodel. Still unable to sell the house for what what we had into it, we decided to see what we could get for rent. We ended up renting to a lovely, two income couple with three small children (she works days, he works nights) who actually came from an even worse neighborhood and were grateful for the opportunity to move to a larger house in a "nicer" area. It took almost a year later and a very scary incident in which a stray bullet from a nearby shooting ended up going through the house and entered in a wall just behind our tenant's daughter's head while she sat on the couch to realize that the house was right smack in the center of Bloods territory. Had we known this from the start, we NEVER would have had ANYTHING to do with this property and would have run fast and never looked back. The couple it turns out were fully aware of the gang presence. And we learned there's even a website you can go to find out where their territories exist. It's now over a year since that incident, the rent we charge is significantly lower than nearby comps. The home equity has increased by $100K. The family is still living there, now on a month to month tenancy since our one year lease expired. They they are good people, take good care of the house, and pay their rent on time every single month. The gang members know who is, and isn't a threat and they do not bother them. The hope is of course that with gentrification, eventually (likely a number of years still down the road) the gang members will trickle out and find someplace else to do their dirty work (or even more hopeful—disappear off the face of the earth) so that decent, law-abiding, tax-(and rent) paying people can go on living their lives in peace.

Circling back to your question @Yishi Garrard, although it seams the realtors/property managers and even flippers ought to know what's going on in those areas, I am not convinced they do for the most part. A few handymen we have hired to go there do know what's going on. Some of them even carry to protect themselves. It's a mad world we live in whether we're aware or not. And very often the fringe and the fray as @Al Williamson so eloquently defined, have much overlap. You see this mostly in large cities, where one street there is much wealth and the next street, or even down the street/across the street there is deep poverty.

Jeremiah Perry · Answer

@Yishi Garrard

I would think in those areas there would be a lot of section 8 so the rent collection would be pretty much automatic....as far as inspections and security deposits though....  Where have you been looking?  Every now and then someone at work tells me that such and such area has a high gang population and you would never guess it by looking at the houses.  I think in most places they have learned that if you want to stay out of trouble and not make yourself a target keep the tagging to a minimum and lay low.  Where they are obvious Id say stay clear, you do not want hoodlums hanging out on your rental properties stoop!

Verna M. · Answer

Well, I had bars on my windows and I wouldn't walk around at night. I didn't worry about my car being broken into in my driveway, but I would not park my car on the street overnight.  It's certainly not for everyone.  Even though it was high crime, it was still a popular neighborhood because it was close to a train station and the Rose Bowl. Which has appeal to the right people.

I wanted to rent it out when I bought my next house. i ended up selling it because I knew it would suck to keep a tenant there.  Sometimes I wish I kept it.

Yishi Garrard · Answer

@Verna M.Sounds like you've got quite the first hand experience and knowledge about this. Was living in those areas as dangerous as the media portrays it to be? Would you say that the demographics of those gang neighborhoods are that they consist primarily of regular, non-gang members who just can't afford anything nicer, but the reason those areas become "gang territories" is because of certain gangs that choose to hang out and conduct business there? In other words, not every house and apartment is filled with gang members, rather, a small minority of those inhabitants give the area a bad rep?

This whole gang neighborhood dynamic has always intrigued me. I have no desire to invest or go anywhere near those areas, but I've always wondered how the true economics of those areas worked on the street level.

Verna M. · Answer

have you thought that the gang members are the property owners?. I can tell you first hand they are.

I lived in a borderline warzone for ten years. They did an episode of Gangland about my block as there had been a drive by about 10 years prior to me buying the house. Bloods of Pasadena of you're curious. I lived right by Wilson/Emerson which is where the drive by was.

It was mixed sfh and mid sized multifamily. Many of the homes were owned by the inhabitants. The multi fans were owed by large investment corps with onsite pm.

At the time I was young and it was all I would afford. My Realtor had taken me to worse places. And he did warn me not to move to those areas as a single chick.

I didn't listen. Yes I was broken into. I put bars on the windows!

housing in gang neighborhoods?

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