You can find gems in bad areas when it comes to properties and tenants. Yes true in bad areas there are higher percentage of bad tenants but trust me there are some good ones out there..its just due to their financial status they cant live in good areas. I constantly see investors bash bad areas...and alot of them either had bad experience and most of the time they did not do their research when it came to finding the right property as well as thoroughly checking out the tenant. All of my properties are in a C area and I have good tenants and the reason why? I grew up and came from a C area....my mother paid her rent on time and our place was always kept clean....I seen the bad and good type of tenants in a C area growing up which gives me a little edge because I know what to look for with tenants as well as I can identity a small area within the C area to buy property. Its all about doing your homework
@Kenneth Coleman it depends on how bad. It is not so much the house, or the neighborhood; it is the tenant. My wife is the PM, if I bought a house like that she would fire me! The tenants are just too troublesome for her and me too.
Logic of not investing in 'bad' areas: A neighborhoods get A tenants. F areas get F tenants. You won't get an A tenant in an F area. Buy in a slum, become a slumlord. Lay down with dogs, get up with fleas.
but I can be as nasty as the people there if I want to be . If you can stomach it there’s money to be made if you can’t there’s lots of money to be lost
You can find gems in bad areas when it comes to properties and tenants. Yes true in bad areas there are higher percentage of bad tenants but trust me there are some good ones out there..its just due to their financial status they cant live in good areas. I constantly see investors bash bad areas...and alot of them either had bad experience and most of the time they did not do their research when it came to finding the right property as well as thoroughly checking out the tenant. All of my properties are in a C area and I have good tenants and the reason why? I grew up and came from a C area....my mother paid her rent on time and our place was always kept clean....I seen the bad and good type of tenants in a C area growing up which gives me a little edge because I know what to look for with tenants as well as I can identity a small area within the C area to buy property. Its all about doing your homework
It depends on your definition of bad area. It is somewhat relative. As @Andre Taylor mentioned growing up in one, his mom always paid rent. My definition is a bad area is what I call a D area (war zone). I’m ok with C areas or challenging areas, but definitely not areas that I would be uncomfortable going to repair something or meet with the tenant.
1) because I’m a scary cat. Not going in a bad neighborhood at 10:00 at night for an emergency
2) because I wouldn’t rent where I wouldn’t live
3) because I’ll be paying more in homeowners insurance than rent coming in
4) because I would spend more money than the home would be worth trying to put the best flooring, appliances, fixtures, and other amenities so that it would look the best on the block. 😊.
@Andre Taylor Solid! Thanks a lot. I grew up in a C area as well that’s why I want to get the property. I went to give that in some way. I have been getting negative feedback on getting the property saying “people wouldn’t want to live in this area”. The area is not bad it’s just the surrounding houses that brings it down in my opinion.
I definitely would. If you can build your tenancy leases in such a way that can protect you from possible mishaps, I think there's definitely money to be made.
People need housing, and sometimes bad neighborhoods are their only option. Being a good landlord in a bad neighborhood can be a blessing for people who are struggling.
You’ve got nothing to worry about as far as getting tenants . There’s a big lack of housing in America especially large cities . When I first got into this RE thing my big fear was being on the hook for expenses and mortgage with no renters . Well that certainly is not a problem even in my D rentals . Find ones ( tenants) that consistently pay is another matter in itself .
@Kenneth Coleman you can do this, but you have to use a different approach to screening and managing. Rents are actually higher for the age, condition, size of the property. The reason rents are higher is because you are building in risk mitigation expense. The tenants will be harder on the property, you will have more unpaid rents and damage. You will also deal with things like midnight move outs (tenant disappears with no notice and you can never find them). On the flip side, you will not improve the property as much as you would in a better neighborhood. You will focus more on the bare minimum. You will deal with rough tenants that have financial and even criminal history issues.
I started out in rougher neighborhoods and moved into better neighborhoods. I just got sick of people destroying my property and lying to me.
@Joe Splitrock thanks a lot! Are you saying rents are higher for older houses or newer houses?
I just mean if you put the same house in a good or bad neighborhood, you could get more in the bad neighborhood. Renters are less selective because they have challenges like bad credit.
There is nothing wrong with bad neighborhoods, just know what you are getting yourself into. Lower purchase price, more problems and less appreciation over time. Make cash flow and upgrade in the future.