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HOUSINGNEWS REPORT
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A NEW BRAND OF NEIGHBORHOODS BREAKING GOOD
BY DAREN BLOMQUIST, EXECUTIVE EDITOR
Several years into a real estate recovery that has produced a plethora of bloated local housing markets, investors in 2016 are on the hunt for increasingly elusive cash flow and home flipping profits — even if that hunt leads them into neighborhoods branded as bad. The bad neighborhood brand is often grounded in data-based metrics such as depressed home values or below-average school scores, but that doesn’t always mean those neighborhoods are a poor investment choice, according to experts.
CEO at OwnAmerica , a Charlotte, North Carolina-based company that provides services to rental property investors. “It doesn’t make it a bad investment, because those factors (schools, crime, home values etc.) are priced in. Rolls Royce v. Hyundai Neighborhoods “Every housing market in the country is a good investment for somebody,” added Rand, whose company works with both large institutional investors as well as with what he described as more creative, entrepreneurial investors willing to operate in a broader spectrum of neighborhoods. “It’s what do you have tolerance for? Do you want to be a Rolls Royce dealer or a Hyundai dealer? There are a lot of Hyundai dealers who are making a lot of money.”
In 19 out of the top 28 U.S. zip codes with the highest share of home flipping in the 12 months ending June 2016, all elementary schools had test scores below the state average, according to a report from ATTOM Data Solutions , the new parent company of RealtyTrac. That included zip codes in the Cleveland, Memphis, St. Louis, Miami, Philadelphia and Los Angeles metro areas. “We’re late in the real estate cycle and that’s the only place people can afford,” said Bruce Bartlett, managing partner at Los Angeles-based real estate investment firm Sequoia Real Estate Partners , of some of the Los Angeles-area zip codes where at least 20 percent of home sales were flips in the past 12 months. There were no elementary schools with test scores above
“There is a lot of profit to be made in going into these neighborhoods,” said Greg Rand,
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