WHY I AVOID HIGH CRIME AREAS WHEN INVESTING

[Jason Malabute]

Crime is one component of the due diligence process that should not be overlooked. Crime and investing don't mix because crime equals risks. Where there's risk there's a chance you'll lose money. And there's one rule in real estate... NEVER LOSE MONEY!

First of all let me say that I have a soft spot for impoverished areas. Most people who live in these neighborhoods are good, hard working, people who are looking for a better opportunities. I have a lot of friends who grew up in these neighborhoods and are the nicest people I know. In fact, one of the reasons why I am in real estate is to not only give back to these communities, but also be an example to the children who grew up in these neighborhoods that they have opportunities at success outside of sports, rapping, and the streets. However, I choose not to invest in high crime neighborhoods because there are high inherent risks of vacancy, non-payment of rent, theft, and inability to find quality tenants. These risks could result in you losing money. That is why I avoid investing in any neighborhoods that are lower than a C. Before you get. mad at me consider these 2 things. It's hard to give back to your community when you are losing money. More importantly no kid wants to look up to somebody who is consistently losing money.

I leave the investing in D neighborhoods to the cowboys who likes to take the risk. I am a risk averse investor.

Here are ways that I avoid high crime areas in any neighborhood:

1. I 'll look at the Trulia crime maps and avoid the high crime pockets that has the highest concentration of crime

2. I'll use Spotcrime to see if there are any violent crimes ON the property itself. I am not too concerned if the crime happened across the street as long as it was not on the property itself .Also, I am looking at what kid of crimes are being committed in the area. Since you are investing in C neighborhoods you should expect some crime. ,Vandalism, assault, and burglary are not deal breakers. On the other hand, shootings, murder, and other violent crimes on the property are red flags . 

3. I will ask my boots on the ground property manager his thoughts about the area and how does he feel like managing properties there

4. I'll visit the property  to get a sense of the vibe of the block myself

5. lastly I will request a police report to see a historical view of crimes committed in that area

By following those steps you should be able to avoid high crime areas and make more solid investments.