Today we’re continuing our trek down investing in real estate, specifically single family dwellings, and I am asking myself why is this relevant for a personal development blog?
5:13
Writer’s Note: I’m not sure why, but ever since I started blogging in the morning, every article seems like I’ve had to build it from scratch. Can any of you tell? It’s been a lot of work, but these are subjects that are on my mind, so you have the privilege of sharing my thoughts. I haven’t got to the point where I will die if I don’t get this done in 30 minutes. May be later, but not now.
A typical home in the area of East Palo Alto where we have invested – Source Trulia.com
Money and our attitude are often a reflection of each other. I realize I take a risk to expose my personal values in relation to investing and how I use my money and so wouldn’t there by some value to us me as a sounding board for your own inhibitions and prejudices? Particularly when it comes to rental properties, not only are you investing, but you are doing something that affects the lives and welfare, often of a family with children.
Now I know, there are some investors who do not give a hoot about who they rent out to, just as long as they get anyone to live in a house, even if it is run down and shabby as they try to get their equity back in as low a cost as possible. To me, I cannot live with that kind of mentality. I want to create positive influences in the neighborhood for the people who become tenants.
I live close to East Palo Alto, for those of you who know the San Francisco Bay Area, you realize there is this this odd dichotomy between Palo Alto, one of the wealthiest places and the host of Stanford University, and East Palo Alto, where in the early 1990’s was considered the most feared policed area having had the highest homicide rate in the country.
Before my wife and I were searching in different areas to invest in, every where from the East Bay to Sacramento but eventually we decided to invest in East Palo Alto, here are some of the reasons:
1) We worked with an outstanding realtor who is also personally invested and thoughtful about the people who live there. He is also from the same neighborhood of East Palo Alto we decided to invest.
2) The particular neighborhood that has short “days on market”, meaning it has high resale interest, so if you had to sell your investment, you are sure to find buyers.
3) The neighborhood also has a higher percentage of non-rental dwellings, meaning most of the people there live their on a permanent basis and have a vested interest in the improvement of their surroundings.
4) Rental rates can handily meet or exceed the amount you pay for a mortgage. With interest rates low and the rental activity very high, isn’t this the preferred situation? The ideal investment property should pay all of your expected annual expenses and sustain itself.
5) It’s close enough I can conveniently be a property manager and address the needs of my tenants and also oversee maintenance and renovation activity.
So there are several “sound” reasons to invest where we did, but at the same time, it’s a place where not everyone wants to.
I know a lot of people who are afraid to conduct any business in East Palo Alto as there is a higher crime level when compared to “west” Palo Alto. The racial composition is also significantly different. From an investment perspective, the leading market indicators, like I have noted, are far more objective that our fears and prejudices would suggest.
When I was in high school, one of my best friends lived in East Palo Alto, so going over there again in 2007, well after the years of it being the homicide-capital, was not too unfamiliar. After repeated visits, looking for properties, working with contractors, working with neighbors, the City services, going back and forth, you just get used to it.
Yes, it’s an investment, but it’s an investment where you have to, not be naive, but be willing to step out of your own box and help others attain a better living condition for themselves and their family. It’s part of my philosophy to have a good tenant-landlord relationship.
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I’ll see you… on the next page
Challen Yee