New House Close To Downtown, Bad Neighborhood

[emirate25]

Will you ever built a new custom home in a shady bad neighborhood that's close to downtown?

When i say bad, i don't mean crime wise just other houses in terrible shape.

[gwilson]

Land appreciates in value inherently. If the homes in the area are in disrepair, the next phase of the cycle isn't too far away (speculators buying properties for future development).

If you like the area and you don't mind living around some not-so-nice houses for a bit, then honestly, I don't see the issue. The only problem I can see is getting a loan to do so as the values of the homes around you would affect the appraisal and the LTV.

[BryanS]

It depends on what you're going for. Some people see their homes as speculative investments; others see it as a place to live. In many cases, you can find existing (albeit older, and maybe not as extravagant) properties in "nicer" areas vs. brand-new high dollar construction in transitional areas.

EDIT: More direct answer: No I would not do it. You don't want to be the most expensive house in the neighborhood, as compared to your neighbors, in my view. Too much of a gamble (but if you're into speculative investing, that's what you'd end up doing - just I don't gamble with my home.)

Edited February 12, 2008 by BryanS

[TheNiche]

Will you ever built a new custom home in a shady bad neighborhood that's close to downtown?

When i say bad, i don't mean crime wise just other houses in terrible shape.

Depends on where, exactly. Even if you can just get two or three good sales comps in the general area to justify the value of your home, the investment and financing aspect is pretty much covered.

I've often thought about building a four-story home and rooftop deck in Magnolia Park overlooking the Houston Ship Channel and all the railroad tracks that parallel it, with Downtown and the Medical Center being the view in the opposite direction. That's about as bad a neighborhood as they come. Financing sure would be tricky, and comps couldn't possibly support me, but for a place like that, I could really care less if its something that I could make happen. It'd be a labor of love.

I think that if you have your heart set on an idea, you ought to follow it. And if you have to ask us HAIFers for thoughts, then my gut tells me that you either aren't convinced of it yourself, in which case you ought to take a very hard look at the universe of alternatives available to you, or your friends and family have been giving you grief because that's not what they would want in a home. If that's the case, just remember who's going to be living there.

Only you know what's right for you.

[musicman]

Will you ever built a new custom home in a shady bad neighborhood that's close to downtown?

When i say bad, i don't mean crime wise just other houses in terrible shape.

i have to agree with most of the others who say that you have to do what you feel is best for you. there are many people who are hesitant to move to a transitional area. i will ask this, why a build a new home when there are some great older ones that can be fixed up nicely?

[emirate25]

i have to agree with most of the others who say that you have to do what you feel is best for you. there are many people who are hesitant to move to a transitional area. i will ask this, why a build a new home when there are some great older ones that can be fixed up nicely?

You are right about fixing up an older home which I would love to do, but I've heard that it can be as expensive as building a new home.

[musicman]

You are right about fixing up an older home which I would love to do, but I've heard that it can be as expensive as building a new home.

it can be but the rewards can be greater IMO. the great trim work in many old homes sure is a nice feature. if you have a larger family i definitely can understand size considerations, more bathrooms, etc.

[emirate25]

it can be but the rewards can be greater IMO. the great trim work in many old homes sure is a nice feature. if you have a larger family i definitely can understand size considerations, more bathrooms, etc.

I'm single, with no kids. I am looking for something around 1600 sq ft

Fixed!

Edited February 12, 2008 by emirate25

[marmer]

I'm a single bachelor, no kids. I am looking for something around 1600 sq ft

Really? you're a single bachelor? How are things down at the Department of Redundancy Department?

[gwilson]

i have to agree with most of the others who say that you have to do what you feel is best for you. there are many people who are hesitant to move to a transitional area. i will ask this, why a build a new home when there are some great older ones that can be fixed up nicely?

You are right about fixing up an older home which I would love to do, but I've heard that it can be as expensive as building a new home.

it can be but the rewards can be greater IMO. the great trim work in many old homes sure is a nice feature. if you have a larger family i definitely can understand size considerations, more bathrooms, etc.

While my business is new construction, I *LOVE* the concept of finding an old house and restoring it to its former glory. The problem with that is it is extremely cost prohibitive, especially if you are trying to do more than just throw on a couple coats of paint.

If you are looking at it as an investment, unless the house has significant historical or architectural value, you will have issues with depreciation on the improvements (even though the land continues to appreciate). It is also far more difficult to borrow money to rehab an older property. It will generally also have a much higher initial cost basis if you are looking to pay for land+improvements if the building is suitable to live in.

In this case, I'd be VERY VERY careful about going in to a rehab project. However, if you're single, with no worries so to speak, this is the time to take that risk if you can afford it. Just watch out for the gremlins inherent in any rehab project.

[emirate25]

Thank you for your responses.