Areas with a lot of HUD owned/foreclosures

[Jonathan Sher]

I have been looking in the Saint Louis area for single family/multi-family housing. When I search HUD listings, A lot of the listings are in a specific area of town. What can this possibly forecast or mean? Is this an area that you should stay away? It this area so bad economically that people in the area can't afford houses? some of the houses are halfway decent, for example, they aren't boarded up 120 year old houses. I would probably be buying single family homes and renting them out or flipping. I know it would be hard to flip a house in a distressed area, but what about renting? What should I be concerned with or consider? To my knowledge, these areas are not war zones.

[Joshua Dorkin]

Jonathan -
Finding renters in parts of a city that are on the decline isn't always the challenge. The difficulty is often finding tenants that meet some standard that you've set - be it income, credit scores, etc.

Before jumping into flipping or landlording in an area, I'd want to be certain that there was a demand for these properties to be rehabbed and that there was a strong pool of tenants that met my rental guidelines.

I've owned property in distressed areas and had to take my losses to get out before those losses became even larger.

My advice - distressed areas are fine if they are on the mend. On the other hand, buying while an area is in decline is a formula for disaster and loss.

Good luck. There's plenty of opportunity int he mid-west -- just keep looking!