I have 100k ca$h to invest...

[Donald Hendricks]

I have 100k cash to invest, the question is, do I leverage myself into a million dollars in debt buying bread & butter post 1978 3/2/2 homes in better neighborhoods where my cash flow would be less, or do I go to the rougher part of town and buy circa 1950 craftsman bungalows from 10K to 20K, put 10k into rehab, which will rent for $500-700 a month and the place would be paid for in 5 years give or take. Some of these homes can be picked up on owner financing. The rougher area ARV would be around 40-50k, maybe a little more, depending on the area. I would not describe the area as a war zone, it certainly has seen rougher days, but the city has cracked down on a lot of the garbage that has gone on in years past. There are efforts at the city level to revitalize the area and grants are available to improve the existing businesses facades in the area. This rougher area is next to downtown where new lofts and trendy apartments are being built, well out of the price range of the clients in the rougher area. My guess is the the trendy hipsters that the downtown area is trying to attract may start buying and renovating in this area as things improve.

I am not risk adverse, and I know that the rougher area will have clients with special needs, so I am aware that it will require more of my time on the management side. My goal is to get enough cash flow to get away from my 9-5 job, which is really a 5 to 5 overnight 5 days a week job.

Any thoughts, questions, input would be greatly appreciated.

[Jon Klaus]

Originally posted by Bill Mitchell:

@Jon Klaus How do you identify "good" areas? Is it just a combination of things such as school systems, driving the neighborhood, crime rates etc?

Schools

Crime rates

Household income

Employment rate

Types of jobs available

Types of businesses (pawn shops vs. casual dining for example)

Propery codes enforced

New construction in area

Do you feel safe at night?

Allow your kids or wife to go to the park?