D Class Neighborhood Investing

[Blake Andrews]

Does anyone have experience/advice owning a rental property in a D class neighborhood? Came across a great opportunity for a duplex that would cash flow $700+ a month, house in good shape with established tenants, only issue is it's in a really rough part of town. Worth noting that I'd be purchasing the home roughly $30k below market value.

 Thoughts and advice would be appreciated!!

[Janice Carter]

Blake, D class can cash flow well on paper but the risk profile is materially higher with crime, turnover, rent collections, deferred maintenance and management intensity. Underwriting needs to be conservative. Assume higher vacancy, higher repairs and tighter tenant screening. If you are not local, strong boots on the ground management is critical. While $700 per month and $30K below market is attractive, just make sure that spread adequately compensates you for the operational volatility.