I've been watching a higher crime area near me. The listing prices of the properties are very low based on the rental rates for the area. Have any of you bought in high crime areas? How did it work out for you in the end?
This post has been removed.
My parents have spent the last 30 years renting in a fairly high crime area. We currently are evicting one tenant who is jail. Also we actually allowed a tenant to serve a 5 month sentence in prison while keeping the lease in his name. The ROI's can be great, but expect a ton of turnover. Expect more repairs (i.e. broken windows, etc.) Don't let a place stay empty for more than a week. And build up a reputation in the neighborhood as a decent guy. I firmly believe that our long term tenants tend to have our backs.
This, I think is such a market to market thing. We've had some really hard years, but because of the cheap buy in we can always turn a profit. But right now, we are in a crazy growth market. I put up an ad on craigslist and within an hour I have 15 people offering me money to hold the property in their name. We're in a very unusual situation, though. What I will say, though, is that if you can build up a reputation as a decent landlord in these kind of neighborhoods, when tough times hit, we've noticed that there is a certain customer loyalty that can come into play. We never aim to be making top market rent, and we trend towards older renters (less likely to get wanderlust, complain, and have a fixed income budget already worked out).
I think this class should be left to professionals, or those with deep pockets that can absorb the blows. Think of it as a 3:2 BJ table game vs pulling a $100 denomination slot.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.