How close to a war zone is TOO close??

Question

Hey everyone!I thought this might be an interesting discussion, and I wanted to see your thoughts.The context: I am currently evaluating an out-of-state duplex in Richmond, VA which is in a C class neighborhood with upside.   There are nice restaurants 10 minutes away by foot, and a developing scene.  One could make an argument that the neighborhood is posed for appreciation.   However, if one walks 15 minutes the other way (about 0.5 miles), they would arrive in a war-zone, a public housing project where there are murders reported almost every year.   Would you be interested in this property for the upside potential, or is it too close to the war zone?   Another way of asking this would be: how close to a war zone is TOO close?Appreciate any opinions on this, thanks so much!

Edwin Watson · Answer

Hey Paul!

Investing in a property close to a challenging area can be tricky. While proximity to developing scenes and amenities suggests upward potential, the nearby "war-zone" area could raise significant concerns regarding safety, tenant quality, and property value stability. A key factor to consider is whether the positive developments are strong enough to transform the broader areas. If you believe in the long-term transformation of the area and have strategies for managing the associated risks, it could be a worthwhile investment, though. However, if the nearby high-risk area poses too great a threat to perceived safety and could potentially deter quality tenants or future buyers, it's probably too close for comfort.

Brandon Spurlock · Answer

Hey @Paul Willis, good questions that you're posing here. Richmond continues to be a fantastic market, and a good duplex is one of the few ways to still attain cash flow, considering current prices and interest rates.

Richmond has many neighborhoods that have been enjoying revitalization, but not without pain points. I tell many clients that any given neighborhood is "street by street, or block by block." While it may take some bravery to invest in a neighborhood that isn't yet fully revitalized, you could be on the winning end in a few years once home values rise. If you wait until that area is completely revitalized, you're going to pay for it. A lot of it depends on your risk tolerance, and how the immediate area is.

Hop on Google street view and "walk" around the block to get a feel for it. Check websites like Spot Crime to see what's happening in that immediate area.

I'm an investor-friendly agent in Richmond, as well as an investor myself. Happy to chat further if you'd like. Feel free to shoot me a DM.

James Mc Ree · Answer

Is the war zone creeping towards the property or are the good guys driving it back and the area is gradually getting safer? I would not invest if the good guys are losing ground, but that would run counter to your description that it is an appreciating area.

It looks fine to invest in for the information you shared if the long term forecast for the area is safe and stable to improving. I would be more interested in knowing about the immediate area today before I made a decision.