would you rather own a cheap house in a poor neighborhood or rent an apartment in an ok neighborhood (Chicago: low income, real estate)

[emathias]

Originally Posted by Drover

I like mine on pizza.

I like mine on someone else's plate.

[andrew61]

Let me put it this way, terms like "poor" and "ok" aside: I'd rather rent an apartment in a neighborhood I really like, as opposed to owning a cheap house in a neighborhood I hate and/or am afraid to walk through.

[Kobber]

If you're talking 'poor' rather than 'bad' and assuming you can't afford to buy an apartment in an 'ok' neighbourhood, I'd consider buying the house, renting it out to a decent family, and using the rental income to subside the mortgage, or the rent on my apartment in an 'ok' neighbourhood. That way I'd at least have an income-producing asset and the possibility of at least some capital gains in the future.

[PokerPlayer1]

There are poor people who are poor because of unfortunate circumstances.
Decision-making and ambition takes you about 85% in life, but the remaining 15% is a coinflip. Honestly, that remaining 15% can be the difference between living in a "poor" neighborhood and living in a decent one.
That 15% can be the difference between being completely homeless and living on the street, or living stably, albeit in a poor neighborhood.
It can be the difference between doing "OK" in life and doing "great" in life.
It can be the difference between doing "great" in life and being the undisputed king of the whole damn mountain.
That 15% is a big, big deal. 85% of life is in our hands and under our own control, but that 15% eventually defines who we are and what we become.

With that said, I do believe a lot of people who live in poor neighborhoods do so because they lack motivation and ambition. In many cases, they're poor because they lack intelligence. While there are definitely unfortunate cases of otherwise bright, upward mobile people who live in poor neighborhoods because of an unfortunate coinflip in the game of life, those people are the small minority in poor neighborhoods. Most people got there because of things that had nothing to do with chance.

These types of people are prone to a certain 'way of living' that I personally cannot tolerate. Their entire outlook on life fails to transcend the next two or three hours. While successful people are planning 30 years ahead, these people don't have anything planned past dinner time.

This method of living eventually devolves into certain behavioral archetypes that are very rare amongst folks in more successful environs. Their status of being "poor" is really just the inevitable outcome of how they carry themselves in life and reflective of the presence of certain untoward behavioral traits. Criminal and anti-social behaviors, slovenliness, drug use, etc- are all far more likely to be found amongst the poor than they are amongst the successful and wealthy.

So, obviously, the answer to your question is pretty clear. Anyone who has ever bought- or even rented- a house knows that you first buy the neighborhood, then the house. It's usually best to purchase the best possible neighborhood you can afford, at the expense of square footage or other amenities that are 'cheaper' in sketchier areas.

[ajolotl]

I've known endless incredibly hard working poor people. Not everybody is cut out for one of the white collar professions. The issue these days is that unskilled service jobs pay near-poverty wages. There is no replacement by and large for the high paying semi-skilled manufacturing jobs of last generation.

[PokerPlayer1]

Originally Posted by ajolotl

I've known endless incredibly hard working poor people. Not everybody is cut out for one of the white collar professions. The issue these days is that unskilled service jobs pay near-poverty wages. There is no replacement by and large for the high paying semi-skilled manufacturing jobs of last generation.

Agree with all of the above, however, in the name of total honesty, "not cut out for" is usually related to the 'intelligence' thing.

This doesn't make them bad people and often times, they're a helluva lot more fun and interesting to be around than more 'successful' types, but it is what it is.
If you take someone who's very hard working but poor (by Western standards, which is upper-middle class in many other places in the world), we can assume that they're either totally unambitious (ambition isn't the same as work ethic) or not bright enough to enter higher paying professions... Perhaps there's an idealist or two down there working for some non-profit, who is otherwise capable of bigger and better things... But yeah, for the most part, it boils down to ambition and intelligence. People lacking ambition and/or intelligence usually live a certain way, which is generally undesirable.

[VieJSink]

rent vs. own still favors the renter. Ask all the 2-3 flat owners that still have negative cash flow. Rent!

[PokerPlayer1]

Originally Posted by VieJSink

rent vs. own still favors the renter. Ask all the 2-3 flat owners that still have negative cash flow. Rent!

Negative cash flow does not necessarily equal 'not profitable' over the long term, when you have tenants paying for the vast majority of your equity and costs to carry (interest, insurance, repairs, etc)

"Negative cash flow" can be anything from .01 cent out of pocket, up to whatever.

Would you pay .01 cent a month out of pocket to generate $1000 in tenant-subsidized equity in a 3 flat?
How about $100?
How about $400?

[Cuito]

In an economic environment where we can expect further price declines, especially in poorer areas, the answer is clear: rent in the nicer area.

[3divina]

Unless you plan on owning the house in the poor neighborhood and renting it out...