Why the Worst House on the Block May Be the Best Investment

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When Jennifer Slater bought the worst house on the block in Hull, Mass., back in 2011, she paid $245,000 for the oceanfront property. That was less than half of what the surrounding homes were selling for at the time. After 15 months and a small investment of a couple thousand dollars for renovations, Jennifer found out she had nearly doubled her home’s value.
 
And she's not alone.
 
In San Francisco, the Sherotters also bought the neighborhood eyesore — and paid 11% below the going rate as a result. With a few key improvements, their original $690,000 investment is now estimated to be worth $1 million. (Watch the attached video for before and after photos.)
 
Turns out that old saying about buying the “worst house on the block” isn’t just an empty adage, it’s a real estate strategy that can pay off for any potential homebuyer.
 
Why?
 
The idea is you're going to get some hidden value if you pay less than what everyone else is paying for a home in the same area, explains Colby Sambrotto, president and CEO of USRealty.com, a website that connects buyers and sellers. For example, the nicer houses on the block can help pull up the value of the neighborhood eyesore after it's renovated (or at least provide a floor, preventing its value from falling). 
 
In the accompanying video, Sambrotto lays out the top three pros and cons of this strategy, and also offers tips for executing it.
 
Special thanks:
Nina and Daniel Scherotter
Brendon DeSimone, BrendonDeSimone.com
Jennifer Slater, EnRouteBaby.com
John Adolfi, www.hudhomebuyingsecrets.com
Angela Kessel, www.houlihanlawrence.com

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