Does location stop you from a great deal?

Question

What do you guys think, there is a duplex for sale for 45k, both sides are under contract. one side for $500/month and the other $550/month. I think there is great potential here, but the only part that is stopping me is it is not in the greatest side of town. It is close to high crime areas, or the "ghetto" if you will.

Do you guys let location of real estate stop you from a good deal?

Jay Helms · Answer

@Brandon McMullin - what are you comfortable with and what are your goals? I've found (at least in my area) there is a sliding scale between Asset Class and Cash Flow. If your primary goal is cash flow, more than likely you'll be in a Class D to Class B- asset. If your acquiring for appreciation, Class B+ to Class A+ should be your target as they will be hard to find cash flowing assets of this type if financing.

I focus on cash flow so that Class C asset has been my sweet spot. Not to scary, meaning I don't feel threatened if I have to go there at night. Make sense?

Abdul Shishi · Answer

Stops me.

Jake Thompson · Answer

It depends on how bad the area is really. Sometimes there are areas that may be low income but doesn't have high crime. Some areas are "in the path of progress" but not quite there. In that case, it may be a little more risky, but have the potential to pay off down the road as the area becomes completely turned and you bought when prices were still low. "C" class areas tend to be better areas for cash flow. I would avoid the war zones though.

Matthew Paul · Answer

It always stops me .

Brandon McMullin · Answer

thank you, I want to hear what others would do. If it stops majority people then I will take your guys advice and stick to good, clean locations.

Does location stop you from a great deal?

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