beltrami park (real estate, foreclosures, rent)

[tjasse]

I am switching jobs and my new office is near Beltrami Park.

There are a lot of cheap foreclosures over there, including at least one triplex. I thought about buying it to fix up and rent out. Would this be worth the effort? There are a few businesses right in that immediate area on the other side of Broadway. There's also Beltrami Park itself, which seems like an ok park. Will these businesses and the park make this small neighborhood eventually be more desirable, or is it always going to be like how it is now?

[BryaninMSP]

If there are a lot of foreclosures in an area, then flipping right away doesn't always pay off, because values are dictated by the market value of other homes in the neighborhood. If you find a foreclosure that needs minor work in a good neighborhood with not a lot of inventory, you might be on the right track. Generally, renovating for value is hindered in most places by regression and diminishing returns — even the best renovations can't easily outpace the value growth of a particular neighborhood.

The best strategy, as with all real estate purchases, is to look at it as a mid- to long-term investment. Flipping shows make the whole process look a lot faster and more lucrative than it actually is. If you find a triplex or duplex, though, you could definitely live in one unit while renovating another, then rent out the renovated units to help cover your mortgage while you fix up the one you want to live in.

With foreclosures there is always a risk of major systems being missing (copper pipes, furnaces, appliances, etc.) obviously. And previously rented units have their own set of risks.

Speculating that a neighborhood is "on its way up" or that it's going to be a 100 percent secure investment to buy in a particular neighborhood is risky and impossible. It always takes longer for an area to "bounce back" in values than it might appear on the surface.

Your best bet is to have a realtor take you through both the listings that need work, as well as the ones that have already been "flipped" to see what kinds of renovations are possible, and what changes are really adding value in a particular neighborhood. For example, turning a main-level bedroom into a formal dining room may add value in some areas, but may decrease value in others.