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I knew a real estate investor who was really successful who's motto was the best investments are those in the worst areas that most people wouldn't touch. Large trailer parks with high vacancy rates, run down neighborhoods, etc.

We don't live in Detroit but bought 3 properties for 40k each with about 18-20% yields. The renters aren't the best (they're paying 800 in rent because they can't afford an 8k downpayment), but they're great investments.

Agree. However, I wasn't talking about 40k homes here, but about $1,000 homes in risky neighborhoods, with the obligation to renovate to code, potentially costing ten thousands of dollars in the process.

There's a reason why the value op the property, including home and land, cratered to $500 or a few thousand dollars. It's the state of the neighborhood that dictates the value and it can change rapidly, faster than in regular neighborhoods.

It's not an investment I would recommended for inexperienced investors or people with limited savings who put all eggs in one basket. And sadly, the low prices attract quite a few of them.

You're explaining exactly why the properties may be a good value. Most people reflexively assume they're a dangerous investment and never take a close look.

When I suggest real estate investing of any kind, I usually hear a wall of objections about risks, and a lack of interest in how to counter those risks. It's part of the reason I like it.

(Not that I'd invest in Detroit, I don't have a rationale for it. Some people do)

There's a big difference between a poor neighborhood and a bad neighborhood (bad for whatever reason: crime, drugs, blight, population decline).

Here's a good example how a lot of the $1,000 homes, and the surrounding neighborhoods, really look like: https://youtu.be/IuJFLJ0JApA . In the description there's a link to a follow-up video 3 years later. It's not a pretty picture. But then again, who buys properties on auctions without inspecting them first?

I tried to skip through the videos to get to the point because they're long and the guy rambles a lot, but somehow I missed it.

It seemed there were some distressed properties and that some work was done on them... which tells me nothing. Were the houses rehabilitated, is work still in progress or were they ultimately re-abandoned? Can any conclusions whatsoever be drawn from this?

I just read the book Evicted by Matthew Desmond which goes into great detail about how much money there is to be made from this approach.

It's definitely sympathetic to the plight of the very low income tenants but not unjustly so; anyway I found it fascinating and worth recommending here:


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