Investing in low income areas?
Hi Bigger Pockets,
I am not sure if this topic belongs in this forum or not.
This is my second year of investing; I have rented one sfh, flipped two houses and currently renovating a third house with the intention to sale.
I am considering buying a home with the intent to hold in a town that is not so great.You can pick a home from $20,000 to $40,000 that does not need much work with rents ranging from $600-$900.The cash flow after 8% vacancy and 10% PM, and other expenses is around 45% for the deal I’m looking at assuming 20% down for financing.
Btw, this area is not a “war zone” and boarded up houses, it is just mainly low income and higher than average crime rates.I can look in better neighborhoods/towns and should be able to come up with cash flow numbers between 20-30%.
I am a softy, and tend to believe people at face value so I would be using a property management company. My question, what is your opinion investing in these neighboring’s that are mostly rentals with the majority made up of section 8 and welfare? Should I stick to lower rates of return or give a high cash flow, and more risk a try?
Thanks, Jason