Do you let "less than desirable" neighborhoods scare you off??

Aurora, Illinois
General Real Estate Investing
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Do you let "less than desirable" neighborhoods scare you off??

Elijah Hollins
Member since 2018 · 2 posts · 1 vote

Hello everyone!

Just started a Bigger Pockets account and I am looking to get into real estate. I am looking for a very affordable property to get the ball moving. 

Do you avoid bad neighborhoods with high crime and low valued homes?

I'm looking in the Rockford, IL area. 

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Renee Fulcer
Rental Property Investor · Winnebago, IL · Member since 2013 · 80 posts · 56 votes
4y

It depends - if I carefully screen tenants, clean up the property and take undesirable behavior seriously in my buildings, I'm likely to improve the whole neighborhood just a little.   My husband and I have purchased a few distressed properties in Rockford and turned them into safe and clean places to live. Personally I love doing it, although the recent eviction moratoriums made it a strain.


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  • Alec Johnson
    Investor · CA · Member since 2022 · 4 posts · 4 votes
    4y
    I'm looking to get my first property. Went to check out a triplex today in California. Looked nice on Zillow and even google maps. In person it was a whole different story, bad crowds hanging around and just overall you can tell its a bad area to reside in. I personally decided i am going to stay away from those areas because it will only bring "less than desirable tenants" unfortunately. I could be wrong but my gut says to walk the opposite way. 
    1Reply
  • Renee Fulcer
    Rental Property Investor · Winnebago, IL · Member since 2013 · 80 posts · 56 votes
    4y

    It depends - if I carefully screen tenants, clean up the property and take undesirable behavior seriously in my buildings, I'm likely to improve the whole neighborhood just a little.   My husband and I have purchased a few distressed properties in Rockford and turned them into safe and clean places to live. Personally I love doing it, although the recent eviction moratoriums made it a strain.


    7Reply
  • Michael Dumler
    Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
    4y

    @Elijah Hollins there is always going to be tradeoffs in real estate. Those less desirable areas you mention will produce a greater cap rate that investors are always referring to but understand, generally, a higher cap rate is associated with higher risk as you have alluded towards. As other BP members have mentioned, it is important to perform your due diligence and have your ducks in a row if you decide to pursue C-class investments. I would advise that you speak with several property management companies to furthermore gain insight into those particular markets. Hope this helps! 

    1Reply
  • Steven Goldman
    Lender · PA · Member since 2019 · 535 posts · 461 votes
    4y
    One of the impediments to investing in distressed areas is the financing limitations. Many funding companies have restrictions on areas that are blighted or have high crime statistics. You should always run your prospects past your financing team mate to make sure you will not have trouble with financing or refinancing. Good luck.
    1Reply
  • Renee Harris
    Real Estate Agent · Los Angeles, CA · Member since 2015 · 218 posts · 111 votes
    4y

    I think it depends on your strategy and goals. Are you buying and holding? I always say "even gangbangers gotta live somewhere." Somewhere there is a landlord making money off them.

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y
    Class D properties/areas: We don't recommend for anyone! Only investors we've seen succeed with them are the local, hands-on investors.

    Class C: newbies should stay away from as they will have problems. Also, do NOT make the mistake of using Class A & B vacancy factors for Class C! Class C will have higher vacancy PLUS nonpayment issues.

    Class B: where most investors should start and focus on.

    Class A: hard to cashflow for first 3-5 years as rents rise. Appreciation though is consistent.
    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    3Reply
  • Ray Riley
    New to Real Estate · Malvern, PA · Member since 2020 · 8 posts · 6 votes
    4y

    @Drew Sygit that’s solid perspective. Today I learned from you. Appreciate it. 

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    4y
    If there's a property in an area I wouldn't be willing to live in, we won't buy it. I'm not referring to not preferring to live there but if I'm feeling uncomfortable and unsafe then I don't want to own a house there. That said, there's plenty of money to be made in rougher neighborhoods for a very hands on landlord.
    3Reply
  • Elijah Hollins
    OP
    Member since 2018 · 2 posts · 1 vote
    4y

    Thanks for all the wonderful replies! I knew I could count in the BP community for some knowledge. @Steven Goldman That's a good point that I would have completely overlooked while searching for my first deal. 

    1Reply
  • Quincy Lockett
    South Holland, IL · Member since 2017 · 376 posts · 432 votes
    4y

    @Elijah Hollins

    For many, if you don’t start here (affordability), you’ll NEVER start investing. It’s the basic training of real estate investing. But NEVER do war zones. Just not worth it unless you’re an expert.

    2Reply
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