Best ‘Bad’ Neighborhoods for Real Estate Investing
By Kerry Curry, Contributing Writer
By many accounts, the real estate market is tightening and it’s getting challenging for real estate investors to find residential properties to buy amid low inventory and rising prices.
It may be time for residential property investors looking for buy-to-rent or buy-to-flip opportunities to consider areas that may be a bit off the beaten path.
Some down-and-out neighborhoods that are rough around the edges could actually provide the best opportunities for residential investors willing to take the risk on a location that may not have perfect statistics, but is poised for a comeback.
RealtyTrac, a real estate data analytics firm, looked at data on construction loans, home flips, school scores, the share of underwater homes and the millennial share of the population in 3,561 ZIP codes to identify neighborhoods that it believes are on the comeback trail.
RealtyTrac identified the 35 best “bad” neighborhoods by further narrowing the data to ZIP codes with a population of at least 2,500 people, an increase in the number of construction loans over the past 12 months, and an average home flipping gross return of at least 60 percent.
It also required that Millennials make up at least 25 percent of the population in these ZIP codes and that the areas have demonstrated an increase in millennial population between 2013 and 2014. The best elementary school in each ZIP code had to have scores below the state average in 2015. Finally, the share of underwater homes had to be at least 15 percent, which is above the national average of 12 percent.
Here’s a look the 35 best “bad” neighborhoods RealtyTrac found for buying a single-family property, including a look at the top five bad neighborhoods and their “rough” and “rebounding” issues that put them at the top of the list.
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