Should I buy the worst house on the best block, or the best house on the worst block?

The conventional real estate investing principle has always been to “buy the worst house on the best block”. The reason behind this real estate wisdom was that the house would likely increase in value as the land appreciated. The house could then be renovated, or torn down and rebuilt, thereby potentially bringing the value up to the houses surrounding it. Even as the house ages and depreciates, the land underneath the house would increase. While this makes complete sense, and no doubt is a great long-term strategy for asset appreciation, this strategy might not be the right one for everyone. Consider that it likely will require a significant amount of capital to renovate or rebuild that property, potentially leaving you with a choice of either having to come up with a large sum of cash, or to sell the property.

What about buying the best house?

Another strategy that goes against this conventional wisdom is to buy the best house on the worst block. While you may not obtain the price appreciation as the land certainly won’t increase in value to the same degree as the first example, consider that the property will likely cash flow extremely well, likely be easy to rent out to someone who wants to live in that particular neighbourhood, and likely won’t require large sums of cash to renovate and/ or rebuild. Depending on your situation, this might be a better strategy for long-term real estate wealth!

Interested in discussing how we can help with your real estate investing needs? Please reach out to us at Fort Park Property Management and Real Estate today!

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