With urban areas on the rise, investors are taking a closer look places like Detroit and Philadelphia, where depressed real estate values can equal opportunity for those with local knowledge.
"A glance at property listings in historically shrunken cities would make any small investor drool. Rents at $400 per unit per month, in a two-unit building for $70,000? Sign me up!
But the underlying reality is less fantastic, and locals know the crucial details that out-of-town investors miss when blinded by an impressive balance sheet. Such details could mean the difference between a sure-fire investment and a sure-fire flop.
Take Philadelphia, for instance. The duplex on 48th Street that fetches $200,000 might only be worth $170,000 on 53rd Street. Why? In this case, a University of Pennsylvania-sponsored program provides its staff with "soft seconds" -- a form of easy loan that need not even be repaid after seven years -- but only for homes inside a "University City" boundary that ends at 50th Street.
Local knowledge is valuable in every real estate market, of course. But in a shrunken city, three causes make such wisdom even more important."
Read the full story: Local knowledge key for small investors in urban areas
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