Class C/D neighborhoods the most profitable?

[Reese W.]

In doing my research it seems that multifamily class C/D tends to have the best cap rate and cash on cash returns any way you look at it. From an investment standpoint it seems like a no brainer.  However a lot of the people I talk to say "ew I would never touch anything in that part of town" (including agents).  I'm not living there myself...and I have a property manager to handle evictions...so why not?  What's the down side, if my returns are better than the class A/B neighborhoods?

[Marc Winter]

@Reese W., it's not quite 'great any way you look at it' for cash flow.  The cap rate and c/o/c look great on paper.  But from years of experience, I can tell you that when you factor in repairs, lost rent, evictions and generally higher crime activity in 'D' areas, you'll end up with the same or lower c/o/c as a B neighborhood.

There are good and not-so-good people in all socio-economic classes; but when it comes to renting low c to d properties, you might want to re-think the 'no brainer' aspect of your calculations.

Good luck.