Completing a BRRRR in C or D neighborhoods

Member since 2025 · 4 posts · 8 votes

I'm searching for my first deal and I want to do a BRRRR, but with the funds available the only homes I can buy with cash and rehab are in C or D neighborhoods. Since the neighborhood isn't the best, I'm concerned the value of the home won't go up over the years as it would in a better neighborhood.

Does anyone have experience doing BRRRR's in C or D neighborhoods that can give some advice? Thanks!

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Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

@Salvatore Amato appreciation is usually lowest in C/D Neighborhoods, relative to the overall local market.

A bigger concern is how well you understand all the challenges!

1) Theft & vandalism while vacant

2) Maintaining to the Neighborhood and not over or under improving

3) Tenant Proofing repairs to save money

4) Dealing with the tenant pool - which will have under 600 FICO scores

5) Having a GREAT Past Due Rent process

6) Understanding the local eviction process and finding an attorney that specializes in evictions

7) Etc.

[email protected]248-209-6824

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Nadeem Alamgir
Real Estate Agent · Member since 2023 · 831 posts · 577 votes
1y
Hey Salvatore, I work with A LOT of BRRRR buyers in the C and D neighborhoods. The strategy works as long as your all in (purchase + rehab) stays under about 75–80% of ARV or leaving some in. If you go this route, make sure the numbers are conservative and that you have strong property management lined up. The tradeoff is tenant turnover, management headaches, and slower long term appreciation compared to A/B neighborhoods.
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y
@Salvatore Amato appreciation is usually lowest in C/D Neighborhoods, relative to the overall local market.
A bigger concern is how well you understand all the challenges!
1) Theft & vandalism while vacant
2) Maintaining to the Neighborhood and not over or under improving
3) Tenant Proofing repairs to save money
4) Dealing with the tenant pool - which will have under 600 FICO scores
5) Having a GREAT Past Due Rent process
6) Understanding the local eviction process and finding an attorney that specializes in evictions
7) Etc.
[email protected]248-209-6824
Logical Property Management4.9451 Reviews
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Samuel DioufBusiness Member
Real Estate Agent · Columbus & Cleveland, OH · Member since 2023 · 1k+ posts · 1k+ votes
1y
Hey Salvatore, when doing BRRRRs in C and D areas the main benefit isn't going to be the appreciation factor but the fact that there is a lot more supply of deals that will give you an all in cost under 80% of the ARV and that the deals will be able to cash-flow after the refinance.
The entire strategy is focused more on the forced appreciation and leverage than the general appreciation, which historically isn't as great as B and A class neighborhoods.
[email protected]614-662-1652
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Eric Gerakos
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
1y
As others have said, keep in mind that C or D properties attract C or D tenants. Higher maintenance, evictions etc.......
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
11mo
@Salvatore Amato The reason everyone is advising against C & D Neighborhoods is because the risks are so high.
If you choose to pursue BRRRs in these types of Neighborhoods, be sure to fully understand these higher risks.
RISKS:
1) Break-ins & vandalism
- In our local C & D Neighborhoods, we remove furnace & hot water tanks when a property is vacant, to avoid them being stolen. Does make repairs more difficult during winter, but contractors can bring propane heaters.
2) Tenant Theft
- When a tenant with a past due balance is evicted, or leaves before we send bailiffs to remove them, somehow the furnace & hot water tank are missing when we get to the property. Can't prove they stole them, but who else had the opportunity?
3) Tenant Retaliation Damages
- Somehow, not paying rent is NEVER the tenant's fault! So, some will trach the property on their way out.
4) Tenant Hard Living
- Violence seems to somehow always find low-demographic tenants. Bedroom doors get kicked in, windows broken, holes appear in walls, blinds & screens ruined, cigarette burns on countertops & carpets, etc. All adds up to higher RentReady expenses when they move out.
5) Uncollectible Tenants
- while the law allows you to get a money judgment for unpaid rents and damages, good luck collecting. You typically collect via garnishing wages, bank accounts or a state income tax refund. Low-demographic tenants flip jobs & banks quickly to avoid garnishments and often don't file income tax returns.
6) Violating Lease Terms
- Tenants all seem to be "dog-watching" for a friend when you ask why they have an unallowed pet on the premises. They also always seem to have a relative or friend staying for a "few days". The property will somehow smell of smoke! They think nothing of painting whatever they want, putting holes for TV brackets, speakers, etc.
7) Section 8 is NOT the Cure-All
- Many newbies make the mistake of thinking S8 tenants are the way to go in Class C & D Neighborhoods. While a landlord will get paid all or a portion of the rent by the government, the time delays, paperwork and annual inspections may not be worth it. Also, what type of tenant do you think qualifies for S8? Some of the worst decision makers! Also, many of these tenants do not work, so they sit home all day, causing more wear & tear - and WORSE.
We manage many Class C properties, but try to avoid Class D.
Good luck!
[email protected]248-209-6824
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Kerlous TadresBusiness Member
Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
11mo
I'd recommend being extra selective on the street level, even within a C or D area; one block can feel completely different than the next. Talk to local property managers who know which pockets stay stable versus the ones with constant issues. If you can BRRRR in a C+ neighborhood that's showing signs of new investment (city grants, nearby flips, or new businesses moving in), that's where you'll see the best balance of cash flow and appreciation potential over time.

[email protected]614-490-1163
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Arman AhmedPro Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 916 votes
11mo
@Salvatore Amato
Hey Salvatore, great question and something a lot of investors face early on. BRRRRs in C and even some D areas can still work really well if you buy right and focus on cash flow first. Appreciation might be slower, but the returns often come from strong rent-to-price ratios and forced equity after rehab. Many investors start in working-class Midwest neighborhoods where numbers make sense, and then trade up later to stronger appreciation markets once their portfolio grows.

[email protected]614-418-6081
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G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 850 votes
11mo
Quote from @Salvatore Amato:

I'm searching for my first deal and I want to do a BRRRR, but with the funds available the only homes I can buy with cash and rehab are in C or D neighborhoods. Since the neighborhood isn't the best, I'm concerned the value of the home won't go up over the years as it would in a better neighborhood.

Does anyone have experience doing BRRRR's in C or D neighborhoods that can give some advice? Thanks!

I got my start in real estate investing doing BRRRRs in C & D neighborhoods. It was a complete disaster.
I have an entire rant about this but the short version is that these properties come with a lot of hidden expenses that don't show up on paper when you're running the numbers. Crime/theft/break-ins. High turnover rates (which means high maintenance & repair costs). Crappy property managers (because the good ones don't work for low commissions and difficult tenants). The list goes on.
Today I only invest passively, as a member of a co-investing club. We meet every month on Zoom to vet a new investment, and any members who like it can go in with $5K or more. It's a much lower-stress way to invest.
I don't miss being a landlord/active investor one bit.
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Min ZhangBusiness Member
Real Estate Agent · Member since 2022 · 1k+ posts · 1k+ votes
11mo
Good question, Salvatore! that’s something a lot of investors wrestle with when starting out. BRRRRs in C or D areas can still work if you’re focused on cash flow and buy right, but appreciation is usually slower and management can be more hands on. The key is buying with enough margin so the numbers make sense even without big appreciation. I’d also look closely at rent demand and tenant profile before jumping in. Have you already run the after repair value and rent comps for a few of these properties yet?
[email protected]614-412-2912
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
11mo
@Salvatore Amato
do not do this, pick a different strategy
happy to dialogue further
i'm working on a BRRRR now
it's in a nice B area
2 Reply
Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
11mo
A better strategy in a C or D neighborhood is to put as little money into the property as possible because the return on any improvements made is typically negative. An exception would be a C neighborhood that is rapidly transitioning to a B hood. But it’s a bit of a gamble on how long that will take to happen, and if it will actually happen. I’ve lost that gamble before. You have to know the location house by house, and be ready to pivot to a different strategy if it doesn’t work.
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