Why Do Haters Hate?

by | BiggerPockets.com

Are working class neighborhoods bad investments?

I just want to address why those in the real estate investing world have such a negative view of working class neighborhoods and cheap properties. I really feel it stems from two places:

  1. They have an old-school way of thinking about these neighborhoods that does not incorporate the new technologies that make vetting these properties easier and
  2. Competition and a conflict of personal values.

There is room for many strategies in real estate investing, and if some can not be convinced, it just leaves more properties for us. Check out the video below for more!

Photo Credit: Erik J. Gustafson

About Author

Lisa Phillips

Lisa Phillips is an REI coach that exclusively advises everyday investors on how to cash in on working class neighborhoods for higher profits with sensible investing strategies. You can meet with her live at her weekend intensives or retreats, in the 4700+ member Sub30k Mastermind Group, or on Google+ here!


  1. Lisa, I really enjoy your contributions to B-Ps! You mentioned in your video “intimidation” in regard to investing in working-class neighborhoods. I do feel intimidated because I lack the education about investing in these neighborhoods. My current strategy is to invest in neighborhoods where I think I understand the people who I will be renting my properties to, if that makes sense, and even then tenants and I don’t always see eye to eye on what is considered okay even when everything is in writing. I tend to stay within my comfort zone in general and when it comes to money, I am even more risk-adverse. My concern is not so much about learning where a good investment deal is and making it happen, but rather the ongoing maintenance and management of the units.

  2. Thank you, and I appreciate your point of view. Comfort zone is always the key ingredient when it comes to risk aversion. However, if you really asked the BP community who invests in this area what the reality is, the same rules apply. As far as management and maintenance? That really relies on how well you screen your tenant (Note: BP Ultimate Tenant Screening Guide is your gold standard), and how well you do your rehab. Working Class Neighborhoods usually means older homes, which usually translates to more upfront repair and install costs. However, we all know, the better your renovation and tenant screening (which is 80% of the real work of owning a rental), the more minimal the maintenance and management of the units will be for the long term.

    Thanks for being willing to listen to something so different than what you are used to!

  3. @Dennis the sweet spot is finding a working class area that close to either a new employment center or you have a wider tenant pool starting to move in. My 2nd rental was in this type of area, but my semi litmus test is how many wireless access points you get. Obviously, you do the numbers, but I lived 5 minutes away and my neighborhood was like that 10 years ago and we now have knockdowns. So the opposite can happen, but, again, don’t bet on appreciation, but it’s gravy if you get it.

    • Dead give away of good things to come in my area is the appearance of a coffee house.

      Crossing my fingers there are rumors of a Hookah bar taking the place where previously a nuisance (drug sales) bar. If this is so, there are probably Yuppies just around the corner.

  4. I have acquired so much property in the area I live in mainly for protection. There is a single owner of one property that held up the sale of our location to a big box. I got a lawyer to do my contract for 9 of 42 and no one else owed over 2. He was so jealous he turned into a devil and ever since 2005 I have had to deal with 2 of my places catching fire and other evil acts by this hateful person. I have tried to ignore the weasel but in todays technology world he has connections to really create anonymous threats and injury. I have been trying to start a business and he has locked me out of all avenues for financial help.

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