Buy a SlumBRRRR or no?

[Joey Allison]

Hey guys, I have a deal that I can go after, but I wanted to get some Bigger Pockets perspective first. Here are the details:

The property is a duplex in a rough part of town, but the cashflow makes sense on paper. I can buy the property off the market for $80K. I would like to put $10k into the land to replace the fencing on the property and replace the ugly yards with a low/no maintenance option. After doing this, I think we can raise each rent easily by $50 on each unit to $550 each. I think the property will appraise for $100k. The duplex itself does not need to be rehabbed. The ROI on this property is 19%.

SIDE NOTE: The property has room for a third apartment to be added later.

After purchase and rehab, refinance, I would leave $16k into the deal. The property would have a net cashflow of $260 per month. That is after saving for vacancy, maintenance, cap expenditures, property management etc....

My question is, the tenants in the area would be lower class and I am not sure if the $250 per month is worth the potential revolving door of tenants or issues they may bring.

[Mike Dymski]

A $50k unit that rents for $550 in a rough area of town will likely loose money.