Author Topic: Primary Residence.. In a not so nice area?  (Read 7387 times)

Denarius

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Primary Residence.. In a not so nice area?
« on: May 10, 2014, 02:01:17 PM »
Good Afternoon Ladies & Gents,

My wife and I are looking to purchase our first home.

We found a beautiful home that is well maintained. Of concern to us, is next street over are low income apartments and the area is sort of dilapidated.

We are looking to start a family soon, safety is a priority.

There are positives aside from liking the house:

Property taxes for this home are roughly less than half for similarly priced homes in our area.

This home in another neighborhood would probably list 15-20% more.

No keeping up with the Joneses ect.

Being apart of the solution.

Is this enough value to consider or would you pay to be in a better neighborhood?




golfer44

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Re: Primary Residence.. In a not so nice area?
« Reply #1 on: May 10, 2014, 02:05:26 PM »
You'll be fine, but what does your wife think? And how bad is this hood, would you walk up and down your street/that street at night? Have you visited it on a Saturday night?

Denarius

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Re: Primary Residence.. In a not so nice area?
« Reply #2 on: May 10, 2014, 02:08:27 PM »
You'll be fine, but what does your wife think? And how bad is this hood, would you walk up and down your street/that street at night? Have you visited it on a Saturday night?

wife is in love with the house. We're going to drive by tonight and see what's going on. I don't think there would be issues walking the street.

FastStache

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Re: Primary Residence.. In a not so nice area?
« Reply #3 on: May 10, 2014, 02:12:57 PM »
I'd be more worried about a house in a good neighborhood close to schools, work, groceries, etc than anything else.  If this cheaper home will make you have a longer commute it may not be worth it financially.

homeymomma

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Re: Primary Residence.. In a not so nice area?
« Reply #4 on: May 10, 2014, 02:13:49 PM »
Have you looked at the crime statistics for the neighborhood? We had this same choice and chose not to live there because while we were visiting at one point, we saw a drug deal go down right outside. Lol. Not encouraging for a young family. I would defer to your wife. Especially if she might be staying home with future babies, feeling safe and able to get out and walk around (essentially) alone at all times of day is so important.

Daleth

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Re: Primary Residence.. In a not so nice area?
« Reply #5 on: May 10, 2014, 02:16:22 PM »
Also, what are your school plans for eventual kids? What are the schools like for this neighborhood?

totoro

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Re: Primary Residence.. In a not so nice area?
« Reply #6 on: May 10, 2014, 02:17:32 PM »
Good Afternoon Ladies & Gents,

My wife and I are looking to purchase our first home.

We found a beautiful home that is well maintained. Of concern to us, is next street over are low income apartments and the area is sort of dilapidated.

We are looking to start a family soon, safety is a priority.

There are positives aside from liking the house:

Property taxes for this home are roughly less than half for similarly priced homes in our area.

This home in another neighborhood would probably list 15-20% more.

No keeping up with the Joneses ect.

Being apart of the solution.

Is this enough value to consider or would you pay to be in a better neighborhood?

I would give it a pass myself if you can afford something different, unless the area is improving overall and this generally means it is a few streets away from a more upscale area - at least where I am.

Not to say you have to live in upscale area but areas that have good safety scores, are near good school and are considered desirable for other reasons appreciate faster.  Even if you take the current quality of life factor out of the picture, you are generally going to make more money on your home in a better area.

Another Reader

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Re: Primary Residence.. In a not so nice area?
« Reply #7 on: May 10, 2014, 02:31:36 PM »
Schools and crime are two key indicators.  What are they like now, and what's the trend?  Is the area gentrifying?  Are you on the edge of the warzone? 

I would not buy this myself, either as a primary residence or as an investment property.  The tenants attracted to this kind of area tend to be on the lower end of the folks that already live there unless the neighborhood is rapidly gentrifying and they get a good deal on the rent.  However, if you like being an urban pioneer and the neighborhood is showing improvement, it can be a good investment, albeit with some risk.

Mr. Frugalwoods

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Re: Primary Residence.. In a not so nice area?
« Reply #8 on: May 10, 2014, 03:01:28 PM »
Always better to buy the crappiest house on the block.  I'd be leery of buying a decent house in a poor area.  What's resale going to be like?  If you, the logical mustachian homebuyer is given pause by the location then what are average emotional people going to think?

If the house hasn't moved in while, feel free to lowball the shit out of the owner.  They are likely sweating the idea that they overbuilt for the neighborhood.

The one exception is neighborhoods that are actively gentrifying.  Then it's ok, but still not a great idea to buy a super nice house.

Another Reader

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Re: Primary Residence.. In a not so nice area?
« Reply #9 on: May 10, 2014, 03:23:16 PM »
+1 for Mr. Frugalwoods.  Worst house in the best neighborhood is almost always the best value.  If this house is overimproved for the area and you still want to buy it, go in with an offer that reflects the value of the other houses in the area and don't add much if anything for the lipstick.

Low income apartments don't get gentrified.  That alone would kill the deal for me.

Denarius

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Re: Primary Residence.. In a not so nice area?
« Reply #10 on: May 10, 2014, 03:32:22 PM »
Thanks for all of the replies. Crime is below the state (OH) and national average. Public High school is ranked top 100 within the state.

I just did a deeper dive on the city pd website. Over a two year period , there were 15 incidents with .25 miles of the house. 99% being theft. This is over 500% higher than where we currently are.

DoubleDown

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Re: Primary Residence.. In a not so nice area?
« Reply #11 on: May 10, 2014, 05:48:58 PM »
You've no doubt heard the old maxim about the three most important things in real estate: Location, location, and location. I would not invest in a property where the three most important things are negative. Call me overly optimistic, but I expect to be able to sell a house later for more money than I bought it (or be able to sell it at all), and would never consider buying a house in this type of location unless I really felt this area was gentrifying (which it sounds like it is/will not).

Thegoblinchief

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Re: Primary Residence.. In a not so nice area?
« Reply #12 on: May 10, 2014, 06:44:51 PM »
You'd probably be just fine, but as others have noted, appreciation is doubtful - mostly the low-income apartment complex.

golfer44

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Re: Primary Residence.. In a not so nice area?
« Reply #13 on: May 10, 2014, 06:45:38 PM »
You've no doubt heard the old maxim about the three most important things in real estate: Location, location, and location. I would not invest in a property where the three most important things are negative. Call me overly optimistic, but I expect to be able to sell a house later for more money than I bought it (or be able to sell it at all), and would never consider buying a house in this type of location unless I really felt this area was gentrifying (which it sounds like it is/will not).

There's a problem, IMO, with this logic. You're making assumptions based on the future - you don't know for certain if your property will appreciate, or if the area will get better or worse. Sure, you can make an educated guess, but the OP has facts right in front of him: he'll save real money, 100% guaranteed, today.

He'll be paying more money the entire time he has the house in today's dollars (principle, interest, taxes, insurance), and then he'll have to pay tax on money he may or may not be gaining in appreciation (ways around this, yes, but my point remains).

bobmarley9993

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Re: Primary Residence.. In a not so nice area?
« Reply #14 on: May 10, 2014, 07:13:16 PM »
Always better to buy the crappiest house on the block.  I'd be leery of buying a decent house in a poor area.  What's resale going to be like?  If you, the logical mustachian homebuyer is given pause by the location then what are average emotional people going to think?

If the house hasn't moved in while, feel free to lowball the shit out of the owner.  They are likely sweating the idea that they overbuilt for the neighborhood.

The one exception is neighborhoods that are actively gentrifying.  Then it's ok, but still not a great idea to buy a super nice house.

+1, well said.

kite

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Re: Primary Residence.. In a not so nice area?
« Reply #15 on: May 10, 2014, 08:10:07 PM »
I bought in a poor neighborhood,  not too far from the projects.   Basically,  in my area, the only single family homes that aren't part of an HOA or aren't massive multi acre estates are the established neighborhoods where working class people live.  Couldn't afford an upscale place when I was 24 and shopping for a home.   Decades later, I can, but I'm not interested.   I know and like my neighbors.  I should add, I knew some of them before we bought here.  Where I live, I can stay my whole life.   The people in the subsidized housing down the block are people,  just like anyone else.  A bit of gentrification has happened since we've been here, but it's still very working class and tolerant. Since I plan to die here, I don't give any thought to resale value.   

Jack

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Re: Primary Residence.. In a not so nice area?
« Reply #16 on: May 10, 2014, 08:42:17 PM »
I agree that strong probability of gentrification is absolutely necessary for it to be worth it. I moved into such a neighborhood, and have been happy with my decision. My neighborhood has been named either the, or one of the, "hippest" in the city for several years running, at the time I moved in my neighbor's houses on either side were worth 3x and 4.5x what mine cost (but there are other houses within a block or two that are still dilapidated), and Zillow thinks my house value has doubled in the 4 years I've lived here. Even the bursting of the housing bubble only managed to slow down the flippers; it didn't stop them.

Now, I could have bought a similar house for a similar price, in a different neighborhood with similar quality schools and a similar crime rate, just without the "hipness" and gentrification. But would I have? Hell no!

DoubleDown

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Re: Primary Residence.. In a not so nice area?
« Reply #17 on: May 11, 2014, 11:08:20 AM »
You've no doubt heard the old maxim about the three most important things in real estate: Location, location, and location. I would not invest in a property where the three most important things are negative. Call me overly optimistic, but I expect to be able to sell a house later for more money than I bought it (or be able to sell it at all), and would never consider buying a house in this type of location unless I really felt this area was gentrifying (which it sounds like it is/will not).

There's a problem, IMO, with this logic. You're making assumptions based on the future - you don't know for certain if your property will appreciate, or if the area will get better or worse. Sure, you can make an educated guess, but the OP has facts right in front of him: he'll save real money, 100% guaranteed, today.

He'll be paying more money the entire time he has the house in today's dollars (principle, interest, taxes, insurance), and then he'll have to pay tax on money he may or may not be gaining in appreciation (ways around this, yes, but my point remains).

I think I'm agreeing with your assessment of my position (although I'm not 100% sure I'm understanding what you are saying). I am saying that if I consider buying a house, I'm making an assumption (educated guess) about its future appreciation potential, and that I would not buy a home where the outlook is bleak or almost guaranteed to be bad. I would only consider buying a primary residence that I thought was in a "good" location that is likely to appreciate over time (I would consider buying a rental home if I felt it had stellar cash flow but poor appreciation prospects).

Yes, the OP could save some $ right now buying the less expensive house in the worse area. But typically the value gained on an appreciating house (particularly a leveraged one) will greatly exceed those savings, no? If my choice is limited to buying in a poor area, or spending 15% more to buy in a good area, I'll pick the good area probably every time. If the choices are expanded to include not buying at all and renting instead, or moving somewhere else to get a better deal overall, those might be better choices altogether. To me, buying a primary residence in a not-too-good neighborhood would likely be last choice.

Rezdent

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Re: Primary Residence.. In a not so nice area?
« Reply #18 on: May 11, 2014, 12:04:12 PM »
+1 for kite's response
The people living in the neighborhood are...people.

Are you planning to stay in this house for a long time?  It becomes more difficult to predict what resale value looks like after 30 years.  However this might not matter if you aren't planning to sell and part of your plan is to retire in a house without a mortgage.  Other factors become much more important when you're planning to stay long term.
I recommend talking to several neighbors.   This is a good idea for any home purchase. This should be easy to do because they would likely be interested in you, too.  You'll get a chance to hear what's it been like for them.   What they think about the schools?  How safe do they feel?  How would you like living next to them?
If the neighbors won't talk or if they seem to hold very different values - that would be a red flag.

samburger

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Re: Primary Residence.. In a not so nice area?
« Reply #19 on: May 11, 2014, 12:12:42 PM »
Poor people almost never bite, not even the brown ones!

Worry about resale values, not about the people.

Dee18

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Re: Primary Residence.. In a not so nice area?
« Reply #20 on: May 11, 2014, 12:42:30 PM »
Before you buy, visit the elementary school when it is in session.

MayDay

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Re: Primary Residence.. In a not so nice area?
« Reply #21 on: May 12, 2014, 06:06:04 AM »
I am curious what area of Cleveland. My fil lives right near the Memphis Kiddie Park, if you know where that is. In his lifetime the area has gone from no English (polish immigrants) to mostly rentals, houses are a dump, etc. His mom, my H's grandma, is the last polish speaking resident.

The houses are adorable and cheap, and I feel safe walking, but I would do some serious research on the schools.  If your kid us typically developing and bright, and has involved parents it will be fine. If you end up with a kid who struggles, and are in a bad or mediocre school, you will likely struggle to get your kid the services he/she needs. It's a gamble.

Zamboni

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Re: Primary Residence.. In a not so nice area?
« Reply #22 on: May 12, 2014, 06:48:23 AM »
there were 15 incidents with .25 miles of the house. 99% being theft.

So put some ADT stickers on your windows (no need for the actual security system), don't leave your bike on the porch, and stop worrying about it. 

Another resource I've found is my local fireman.  Firemen get to go inside houses pretty regularly with no advance notice, so he seems to know which neighborhoods are really bad (crack houses and gang warfare crossfire) and which are perfectly fine despite having some run down homes or apartments in places.

What exactly would you determine by looking at the local elementary school when it's in session?  That the students are brown?  That the parents drive luxury cars or mustachian cars? Remember, "good schools" is often just modern code used by white people who want to live in segregated neighborhoods but don't want to sound like racists (because, of course, they are not racist; just ask them!)

Elaine

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Re: Primary Residence.. In a not so nice area?
« Reply #23 on: May 12, 2014, 08:56:28 AM »
It's hard to answer questions like this because what you might think of a "rough" area, I might find perfectly fine. Low income housing doesn't necessarily mean the area won't be safe, but it's worth investigating. Like others said I would pull up the crime stats on the area. I think I posted this for another similar question, I've moved a million times and this is my method for checking out the safety of a neighborhood.

1. Walk around by yourself at 10:00 on a Saturday night, just go down a few streets, walk around the block. I prefer to do this while wearing a skirt or dress to see if I get harassed at all (better to know before you move).

2. While you're walking take notice: are there large groups of people (ok, men-sorry guys) standing on corners, not having a BBQ or listening to a game, but just loitering? To me that's a bad sign.  Are small kids still out on the street in droves by themselves after 10:00? That's also not a great sign, IME.

3. Walk around on a Sunday morning during post church time. This gives you a chance to see more families, as well as people who normally work during the week. Take this chance to stop by the grocery store too. Look at what is being sold (is it all junk food?) and who is in the store. If on a typical weekend the liquor store is busier than the grocery store, that's probably a bad sign.

Hope this helps.