Would you owner-occupy in a high-crime area?

Question

Hi there! My husband and I are new investors and are looking for an owner-occupied multifamily in New Jersey. This will be our first property. We've been viewing homes and putting in offers for a few months now. This past weekend we had an offer accepted on a property that we had some second thoughts about due to the neighborhood, and some issues with the house itself. Both times we visited the property, we did not feel very welcome or comfortable on the block, and a search on Trulia showed the area to be high in crime.

We were pretty conflicted when the offer came back accepted (contingent upon us using their preferred lender), and we ultimately decided to pass on the property. The more we thought about it, the more we struggled to really picture ourselves living there comfortably, especially when we considered that we're planning to start a family after we purchase this first house.

So, what are your thoughts on owner-occupying in this scenario? Would you have bought the house, or let it go? What factors would go into your decision?

Douglas Mcqueen · Answer

For me personally I would pass just as you did whether I was planning to owner occupy or not, i tend to avoid high crime areas for a multitude of reasons, primarily they present occupancy challenges.I will say that prior to submitting an offer i would research the area you are shopping in and have that information going in. The more you know ahead of time the more informed of an offer you can then submit.I approach every building from the same lens, i ask my self "Would i move into this building with Jen (my wife)? If the answer is no and its a problem i can not rectify (such as high crime) i move on its that simple. I do not want to rent a unit that i would not feel comfortable and or safe living in. There are 1000 different things involved but that is my first litmus test when scoping out a new area in a market everything else comes next to that.Have patience and the deal will come!

Evan Polaski · Answer

@Patrice Bocci I can only echo others responses. But I want to add some color on how I look at properties, regardless of house hack or straight investment:Would I live here with my wife and two small children?Would I be comfortable sending my wife to the property at 3am alone?If either is no, I won't buy it. Not only do I not want to be a victim, but also because I know I am average. And that means if I would live there, other people will want to live there. That being said, if the crime rate is currently high, but it is going down, dramatically. A coffee shop has opened, maybe a new hip restaurant, then you are on the precipice of a likely strong turn around and could get in for cheap. But there is a lot of risk in that. Typically, that turn around is very fragile for many years, and can revert back quickly. BUT you look like a genius if it does turn around and you bought in before others saw it.

Andres A. · Answer

If you don't feel comfortable visiting the neighborhood, you should not even put an offer on the house

Lynnette E. · Answer

Earning a few bucks is never worth being a crime victim. Having you house broke into once is not worth whatever you make on the deal. The loss of feeling safe and secure in your home can not be replaced. And potential violent crimes make the property worth even less.

Patrice Bocci · Answer

@David Trevino I absolutely do!

Michael Noto · Answer

While numbers are always important when evaluating a house hack situation, in my opinion the only thing that should trump the numbers in the decision making process is your safety and security. Living somewhere you do not feel safe just because a spreadsheet says the numbers are good never made sense to me. I have had many clients over the years buy house hack deals and almost all of them eventually gravitate to neighborhoods they are comfortable in as opposed to areas where the paper numbers may be better in a worse neighborhood.

Nick Rutkowski · Answer

@Patrice Boccii I would have made the same decision as you.

David Slovak · Answer

@Patrice Bocci I had been contemplating the same most recently. Really glad I saw this post! Hope you find a better deal 😁Would be great to get an update on what kind of deal you ultimately come across as an alternative if you wouldn't mind. Great to see when thing work out despite the obstacles that present themselves in the investor world.

Patrice Bocci · Answer

@Jared Wilbraham That was exactly my thought process. Thanks!

Jared Wilbraham · Answer

If you do not feel comfortable living there, while house hacking it (and living completely or mostly for free), I think you're going to struggle to find a tenant who is willing to pay to live there. I think you made the right decision by passing up on the property.