addendum to "the future of oak park, and buying a house now" (Sacramento: city hall, rental)

[homerjoker]

OK my original post is below in a different color.

My new question is this:

In looking at homes, i noticed some deals in two other areas:

one would be; del paso heights, near haggin oaks golf course [ some have told me way too dangerous]

the other [ much larger lots ] is; near the sacramento executive airport like near fruitridge and franklin

so my question is what are good comparisons of these 3 areas as far as
1]safety
2]revitalization
3]appreciation
4]general overall neighborhood and quality of life....

quite alot i know


ORIGINAL POST:
OK. So here is the deal for me... I am looking to buy a house in/around Oak Park with the feeling that it will be a good investment in this sense:

I am 39 and plan on living in the house for at least 10 years, if not longer

I am looking [mostly] at the area between 12th/14th ave and Broadway.... and between Franklin and 44th st. [ i have looked at a few places on big lots that i like ... and have nixed some others... i know the area is not perfect... but has potential ]

I have really bad credit, but can spend 40k cash on a house, with about 10k for improvements/security/landscaping. {i have turned other dilapidated hud repo's into really nice properties}

I have walked the area in the daytime and at dusk over the past 3 weeks and do not have a problem with it or the people that live there, [ no judgments but i am not an outer suburbs kinda person... either the city or way the frak out in the country]

I like Sacramento - it is like California's Portland to me... working class, hipster, freaky, diverse... as well as close to reno, tahoe,sf etc...

I believe that the pollution [ my one real sacto downer ] will clear up here due to green technology and autos.

I have a roommate that wants to move with me and will pay $400 a month.

The other places i can afford to buy in right now are ohio[anywhere], pittsburgh, memphis, florida[jacksonville,panama city, tampa].... but i do not know these cities [save pgh] ... i have lived in Northern Ca for the last 15 years... from way up north ... down to SF... as well as pgh and nyc

yikes i am rambling

so here is my question to all you faithful and knowledgeable posters...

Is Oak Park going to be revitalized [ over the next 10 years or so ]. It seems to be right next to some really 'nice' areas [ curtis park, land park, midtown]

My gut says yes. and also my gut says that after obama gets inaugurated, there will be all kinds of money thrown at the housing crisis, and i may miss my window.

please try not to hit me with a myriad of graphs and charts...too confusing although i have already linked to many posters data.

ok ready set ..go

[wburg]

I'm a central city snob, so personally I'd say oak park, as it is closer to downtown. A lot of students, slackers and musician types I know are moving there (out of midtown) because it's cheap (and midtown isn't anymore), which is almost a sure sign that in ten years it will be the up-and-coming hip district, with up-and-coming property values. Our new mayor is from there and has a vested interest (including property investments, his nonprofit and his high school) in seeing the neighborhood shaped up, but really, having the kids move in is more important because they, not city attention, make a neighborhood cool. City attention just spurs investment to follow the cool.

Farther south towards South Sacramento is going to take longer, both because it is farther from the central city, nowhere near being an up-and-coming cool area, and neighboring areas aren't getting any better.

Finally, I think you should buy in Oak Park because Oak Park needs folks like you...handy with tools, willing to invest, and looking to hang out with the diverse freaky hipsters.

[zen_klown]

I don't believe in bull****ting people. The places where homes are selling for less than 50k are going to have problems. You are going to have to deal with the local prostitutes, gangbangers and drug dealers and from time to time stuff like this. Maybe not this exact problem, but something like it.

Three convictions in firebombing of professor's home - News (http://media.www.statehornet.com/media/storage/paper1146/news/2007/02/28/News/Three.Convictions.In.Firebombing.Of.Professors.Hom e-2749681.shtml - broken link)

If you aren't willing to deal with that type of stuff. Don't buy there. Save up your money and look somewhere else. In terms of safety, and quality of life all of these neighborhoods have problems. It is why they are so cheap. If turnarounds in any of these neighborhoods was imminent, the homes themselves would be much more expensive than 50k.

But you also said you aren't the type of person who would flourish in the outer suburbs and that you were prepared to accept the neighborhood as it is right now. Moreover you said that you were willing to hang on for the long term.

At the 50k price level, its profitable to slumlord. So if you need to sell the place, there probably will be someone who will buy it from you at that price in the future or you can just turn the place into a rental yourself. So there is an exit strategy if you need to move.

But here is the thing. In the neighborhoods you are looking at its much cheaper to own than to rent. If own in those neighborhoods, you keep the money that would be otherwise paid out to the slumlord. To me that is the biggest reason to buy in any of these neighborhoods. It will save you money over what you would have spent to rent in any of these neighborhoods.

If the neighborhood you buy does turn around, you will do very well. But I am not sure that any of these neighborhoods will turn around. The neighborhoods you are looking at have had problems for a long time and none of them have turned around during that time. There is a good chance that they won't turn around. So you don't want to overpay for a property in these neighborhoods. You want to make sure, you will do okay even if the neighborhood doesn't. I hope these neighborhoods turn around, but hope isn't a business plan.

If I was going to gamble on any of these neighborhoods. I would gamble on Oak Park, followed by Dixieanne (the neighborhood between Arden and El Camino just east of Del Paso Blvd).

If Kevin Johnson was purely interested in making money as developer, he would either being doing stuff in Midtown or out in the outer burbs. Development in either of those areas is easier and probably more profitable. But Kevin Johnson made a bunch of money playing for the Phx Suns, money isn't his sole concern here. He grew up in Oak Park and he wants to fix the neighborhood. He has found really smart people like Margaret Fortune who he brought in to take over the local schools as part of his St. Hope project. He also tried to bring in new investment to the neighborhood. He got Starbucks to invest there. Is there more he could have and should have done? Yes.

My hunch is a big part of the reason he ran for mayor was to try to shift the emphasis in city hall more towards Oak Park. There are things the city can do to make Oak Park more livable. Code enforcement in the neighborhood can improve and police patrols can improve, all of which could drive some of the drug addicts, prostitutes etc. from the neighborhood. If some of the worse elements of Oak Park leave the area, the neighborhood will improve and property values should increase. If the schools improve, again property values should improve.

The incoming mayor of Sacramento didn't grow up in any of the other neighborhoods in Sacramento. You don't see a push from anyone else with money or influence trying to turn around these other neighborhoods. I am not sure the schools will improve in these other places either. I don't know if there will be pressure brought to bear to bring in new money and investment to these other neighborhoods.

The one other neighborhood, I did mention was Dixieanne. Its near a bunch of light rail stations, its not too far from downtown and its very close to Woodlake, which is a neighborhood that has held for a very long time despite a tremendous amount of neglect. Moreover there are signs of life on Del Paso Blvd. If transit oriented development in this area ever does take off. That neighborhood should be well positioned to benefit. Mass transit in this town isn't that great. But mass transit in that neighborhood is pretty good.

The neighborhoods that tend to gentrify are the ones that are near pockets of areas that are doing better. Dixieanne is pretty close to Woodlake. Other than Oak Park, that would be the other neighborhood, that I think has the best chance of turning around.

[edwardius]

Originally Posted by homerjoker

OK my original post is below in a different color.

My new question is this:

In looking at homes, i noticed some deals in two other areas:

one would be; del paso heights, near haggin oaks golf course [ some have told me way too dangerous]

the other [ much larger lots ] is; near the sacramento executive airport like near fruitridge and franklin

so my question is what are good comparisons of these 3 areas as far as
1]safety
2]revitalization
3]appreciation
4]general overall neighborhood and quality of life....

quite alot i know


ORIGINAL POST:
OK. So here is the deal for me... I am looking to buy a house in/around Oak Park with the feeling that it will be a good investment in this sense:

I am 39 and plan on living in the house for at least 10 years, if not longer

I am looking [mostly] at the area between 12th/14th ave and Broadway.... and between Franklin and 44th st. [ i have looked at a few places on big lots that i like ... and have nixed some others... i know the area is not perfect... but has potential ]

I have really bad credit, but can spend 40k cash on a house, with about 10k for improvements/security/landscaping. {i have turned other dilapidated hud repo's into really nice properties}

I have walked the area in the daytime and at dusk over the past 3 weeks and do not have a problem with it or the people that live there, [ no judgments but i am not an outer suburbs kinda person... either the city or way the frak out in the country]

I like Sacramento - it is like California's Portland to me... working class, hipster, freaky, diverse... as well as close to reno, tahoe,sf etc...

I believe that the pollution [ my one real sacto downer ] will clear up here due to green technology and autos.

I have a roommate that wants to move with me and will pay $400 a month.

The other places i can afford to buy in right now are ohio[anywhere], pittsburgh, memphis, florida[jacksonville,panama city, tampa].... but i do not know these cities [save pgh] ... i have lived in Northern Ca for the last 15 years... from way up north ... down to SF... as well as pgh and nyc

yikes i am rambling

so here is my question to all you faithful and knowledgeable posters...

Is Oak Park going to be revitalized [ over the next 10 years or so ]. It seems to be right next to some really 'nice' areas [ curtis park, land park, midtown]

My gut says yes. and also my gut says that after obama gets inaugurated, there will be all kinds of money thrown at the housing crisis, and i may miss my window.

please try not to hit me with a myriad of graphs and charts...too confusing although i have already linked to many posters data.

ok ready set ..go

I think you are getting some bad advice here.

I have both made and lost money on fixer uppers. As an individual, you can fix up a house, but you really can't do much to fix up a neighborhood.

In the neighborhoods you are looking at, the reason why so many homes aren't fixed up is that it costs more to fix up these places than you will increase the value of the home by fixing them up.

In Oak Park, if you look at the cost of redoing the kitchen, redoing the bathroom(s), putting on a new roof and putting in a new HVAC system generally you won't get back what you spent to fix those things.

This is why there are so many abandoned homes in the neighborhoods you are considering. Economically its more expensive to fix these homes up than what you will get back from fixing them up. So the property owners abandon the property when the repairs get too expensive. Only the government or charities like Habitat for Humanity are going to fix up homes in a place like Oak Park. Only work in Oak Park if you can get someone like the government to pay you to do this work, otherwise you are going to lose money here.

Economically you seem like me when I was starting out, someone who couldn't afford it when investments went bad. So you aren't the type of person who can afford to spend time on losing investments like Oak Park. The idea that neighborhoods improve when the cool people move in is just malarkey. No buyer has ever cared how hip or unhip I was in deciding to buy a property from me. For potential buyers, personal safety almost always trumps percieved coolness. If someone shoots your girlfriend or your kid, the neighborhood is no longer cool.

Your time is worth the same to you whether you work in Oak Park or a better neighborhood. There is nothing wrong with getting your hands dirty. I believe in sweat equity. Its how I got my start. But if you look in a better neighborhoods, like Elmhurst or Curtis Park you can find deals where you will recover both what you put into the home to fix it up as well as get money back for the time you spent fixing the place up.

If you are going to invest in fixer uppers, do your homework. Look at comparable homes in the neighborhoods you are interested in. Look at home much simliar homes that are fixed up are going for right now and how much it will cost you to fix up a home to that level, then make an allowance for cost overruns and make sure you include an estimate of how much your time is worth to you. You aren't a charity. You are someone who deserves to get paid. It much easier to buy a fixer upper than to make money on a fixer upper, so spend some time looking for something where you can actually make some money.

[homerjoker]

thanks so much for the thoughtful and intelligent replies. there definitely is a lot to consider, and i am fortunate that you guys are taking the time to sit and write out replies... i will let you know how things turn out... but keep throwing me bones as they come to you, i'd appreciate it.

[wburg]

The difference is, if you're looking to fix up a house to flip, and that's what you want to do to "get paid," it's not such a good idea. If you're looking for a house to live in and are willing to fix it up a bit at a time, repairing what's there wherever possible instead of replacing with new stuff, you'll end up with a fairly nice place to live and probably end up paying less overall than you would have to rent a house for years, and definitely a lot less than buying a house in an "established" neighborhood.

I know a lot of folks who moved to midtown/downtown Sacramento in the 1970s and early 1980s. People thought they were INSANE. Initially, loans were literally impossible to get: FHA "redlining" policies basically prohibited home loans in nonwhite neighborhoods. Some folks literally bought homes with their credit cards, others saved up and paid cash. Many had friends or family try to talk them out of it, fearing for their safety. Undeterred, they moved into semi-habitable Italianate townhomes, Queen Anne cottages and Craftsman bungalows in run-down neighborhoods like Boulevard Park and Poverty Ridge, learned how to do the work themselves, and fixed them up. Today, these homes are recognized as our community's treasures, and still command a premium price.

People literally don't believe me when I tell them that J Street near the Governor's favorite restaurant Lucca was a hooker's stroll until the 1980s, or that a mansion-like home in the Marshall School neighborhood was once a meth lab. The people who moved into these places, not to make a buck but to make a home, are the real reason why midtown Sacramento is a beautiful success story--the rest of the stuff came later, after all the hard work had been done.

For someone who has $40,000 to throw at a place and bad credit, even "fixers" in Curtis Park or Elmhurst are probably out of the question. If homerjoker was asking for advice on a fixer he could flip quickly and make a pile of money, the answer would be different, but from what I have heard so far he is looking for a place to call home, which means a whole different set of variables. I would, however, encourage edwardius and other home-flippers to stay the hell out of Oak Park. You'll lose money. People won't want to buy there, the neighborhood isn't wealthy enough and the nearest sushi place is outside of walking distance.

[edwardius]

If you want people to believe what you say, provide a link to reputable source to back up your claims. Then there is no dispute as to whether what you are saying is true or not.

When it comes to making money from sweat equity, you really strike me as someone who lacks first hand knowledge. I have fixed up places myself. I have pulled the permits, I have done the plumbing, I have done the electrical work. I have had to rework jobs that I did wrong the first time because various inspectors said I did stuff wrong and I had to pay fees to have them come back and reinspect the work. This happened on project where I lost a bunch of money that I couldn't afford to lose at that time because I didn't have a pot to pee in or a kettle to throw it out.

I didn't do it in Oak Park, I did it in Sun Valley. Because at the time, that was one of the few places where I could afford to buy something. But when you have put a lot of time and effort into something where you lose a bunch of money that you couldn't afford to lose. It pisses you off. A big part of my problem was the deal was actually unworkable from the beginning. I had this dream that if I build it, it would all pay off in the end. It didn't. For all of the time and effort I put into the Sun Valley project, I would have been much better off just moonlighting at McDonald's.

That was a big reality check. After that, I had a much better idea of what it cost to do things and what things to look for in the next deal. I also learned to not waste time pursuing unworkable deals and to be skeptical of anyone advocating unworkable deals.

[homerjoker]

hey guys.. play nice!!... no, i understand that you are both coming from places of concern and passion. awesome qualities. i am definitely not a flipper. that is a crazy idea in this market. Am i an idealist? yes to a degree, but not so much so that i live amongst rainbows and unicorns... [ well once in a great while --- but i toured with the Dead for a while - way back in the day so....] i am college educated yet blue collar at heart.

i know that is going to be a tough few years. in one way, municipalities and states will be going belly up soon, but in another - the new federal administration will be handing out money like beads on fat tuesday [ no boobies required ] that is unfortunate for future generations, as the us govt has given away its power to control the us currency to a central banking system that has no right to exist. [ but this is another thread topic]

i crunch numbers, i find thrifty ways to do some pretty cool things, i work hard, but i also keep an eye out for the cold hard truths of this world. that firebombing story was sad and discouraging. yet the simple fact that three people were caught and are going to jail for it, swings the pendulum the other way as a deterrent for future actions of the same kind. i vaguely remember midtown from when i first travelled around CA, but it obviously is a success story in many ways. My gut says oak park can buck the trend... but i also know that the world is a dynamic place, and just as fortune could turn into misfortune, it is a two way street. i'll bet there were a lot of people enjoying themselves in thailand a few weeks ago, ... and now????

looks like i am going to be in CA again soon, which will allow me more time in the area - to get a deeper look. [ i havent really spent time in the other places i mentioned, so that is on my agenda ... as well as checking out your leads] and then i will be back again, all the while playing mental ping pong. but i think it was will rogers that once said," even if you are on the right track, you will get run over unless you move." so i have to keep that on mind too.

keep dropping in on me if you can. as i said i do appreciate it. perhaps i can treat you guys to lunch at some point - i know a great veggie place in nevada city.

still thinking.... homerjoker

[wburg]

edwardius: Sorry if I came on strong, but I am not talking about making money from sweat equity. I am talking about making a home to live in. I don't have firsthand experience in fixing up homes specifically to sell, but I do have experience in fixing up homes to live in.

More specifically: for five years I owned a small house a couple blocks from Sacramento High School, a bit north of Oak Park. It wasn't a seriously bad neighborhood, but at the time I'd definitely describe it as "marginal." When I bought it, it was a former rental in pretty sorry shape. I did some of the work myself (I'm not a contractor, but I can correctly identify one end of a hammer from the other two times out of three) and had other work done by professionals. I lived in the house the whole time, and my goal was not resale value but livability for me and my wife. We didn't limit our activities to our property line, either: we picked up trash in the neighborhood, started calling code enforcement to have the city fix things like streetlights, helped form a neighborhood association, and encouraged our neighbors to do the same.

Over the five years, the neighborhood did change. Nearby houses with bars on the windows took the bars off. Others that were dilapidated with overgrown lawns got more fixed up and the lawns sprouted landscaping. I don't think that we alone were responsible, we were just one of many folks, some new move-ins and other long-time residents, who realized it was a neighborhood worth caring about.

I sold the place about two years ago--during the big precipitous fall in the housing market. It took a few months, and I had to shave almost a third off of the asking price to sell it, but after subtracting the cost of improvements it was sold for nearly twice what we paid for it. The total amount would not have been very much if I was a "flipper" doing the work as a source of income, but I wasn't. The house was my primary residence, which means in many ways I lived rent-free for five years, with a few bucks for my trouble.

A friend of mine recently bought a house in Oak Park in very similar circumstances to homerjoker above: he had some money but poor credit, doesn't care about resale value, he wants a home to live in and the security of not having to depend on a landlord. Another friend, who has lived in Oak Park near McClatchy Park for a few years, is doing most of the work and I'm doing some of the gruntwork. I don't have links to websites or whatever, I don't have any statistics, I just know what my friends are doing and the evidence of my own senses. I am in Oak Park 2-3 times a week, and I have seen the changes going on. You are perfectly free to think I am wrong.

[zen_klown]

I have no first hand knowledge of if there was prostitution on J. Street in the eighties, but I have no reason to believe that wburg is lying about the matter either. I know a guy who owned several buildings in near Southside park and he said that area (I believe it was S street) used to have a problem with prostitution so the claim seems consistent with stuff I have heard.

As to hipness improving neighborhoods. I think it was Jane Jacobs who said that neighborhoods improve as their livability improved. I think livability is more useful way of framing the issue. In Oak Park, I think the Bicycle Kitchen is something that makes that neighborhood more livable. Its a place where you can find someone else to help you fix your bike cheaply. I understand why Kevin Johnson brought in the Starbucks to Oak Park, but I also think a local cafe would have been a better idea. You can find Starbucks anywhere. But local cafes tend to take on local personalities and tend to create spaces where people can get together to do certain stuff. There are cafes where people get together to play chess, others that showcase local artists - stuff like that.

As you get an accumulate of those types of uses people decide that a neighborhood is worth living in. The livability improves.

That said, I also think the highest and best use for Oak Park still might be for Sacramento's poor hispanic folks which demographers expect to be a growing group. If you go into the grocery store at Stockton and Broadway (Food 4 less?), what you notice is that neighborhood is changing. There are fewer African Americans and more hispanic folks. The neighborhood also has lot of features that make it appealing for the poor and latino. Its not far from Thriftown, Kmart, the La Superior Supermarket and its not far from downtown. The Salvation Army runs a youth program in that area. The Sacramento Food Bank offers computer classes. For a while, (I don't know if it is still the case) the bus route on Stockton Blvd was one of the busiest in the city.

In terms of livability, the features of the neighborhood are a lot more valuable to people who are poor or very poor. As African Americans continue to get wealthier, more of them will be able to escape neighborhoods like Oak Park. But from immigration, there seems to be a constant influx of the poor and uneducated from latin America, so the economically distressed neighborhoods are probably going to turn from black to brown. Oak Park is a neighborhood that I am not sure will gentrify. I hope it does, but I am not sure that it will.

The neighborhood that I think has the best chance of gentrifying during the next 20 years is probably West Sac, but I also doubt that you are going to find many places for less than 50k there either. Its near the waterfront. The process is much further along there.

As to the morality of flippers. Everyone needs to be able to make a living. They also improve the housing stock. Both of those things I think are good things. In general, I favor buying a house when its seems likely that housing prices have stabilized in a neighborhood. Ownership is the best form of rent control I can think of. But whether someone makes money and contributes to gentrification from buying and holding for the long term in a neighborhood or whether someone makes money and contributes to the gentrification from flipping a property in a neighborhood is a moral distinction without a difference to me.