Rental Property Investor · Chicago, IL · Member since 2017 · 219 posts · 180 votes
6y
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
Lagrangeville, NY · Member since 2017 · 144 posts · 218 votes
6y
I purchase rentals in c/d neighborhoods and i've made a bunch of money doing it. Trick is to stay focused on my proprietary algorithm: High crime + High Tenants = High returns
Rental Property Investor · St.Louis MO · Member since 2014 · 33 posts · 16 votes
6y
@Andre Taylor YES! Too many times landlords/owners made poor choice or uninformed choice and then decide through flawed logic to blame it on "the area" or a "section 8 tenant". Ultimately, you have to perform the same due diligence when checking your tenants and vetting them, no matter what area you own/rent in. It's very easy to blame a neighborhood or Section 8 or tenants' "attitude" when the reality is, it's on US as landlords to make sure we do our homework, vet tenants properly, know how to work with people when they have an issue, etc. It's a business, and every business has its ups and downs. If it was as easy as, "just buy in a "good" area and then you don't have to worry" - everyone who bought in that area would be a millionaire. It takes work to be a successful landlord. Also, we have to remember - EVERYONE needs a place to live. Everyone. Meet people where they are, be willing to do your homework, and you will find some great tenants.
Property Manager · Virginia Beach, VA · Member since 2016 · 2k+ posts · 2k+ votes
6y
I prefer the buy low, rent high model, so yea, I buy in low income neighborhoods. I don’t buy in the absolute worst places in our market though. Even SEC 8 tenants don’t want to live in gang infested zones. If you don’t know where they are, google gun shot wounds and filter your time setting for the last year and you will see where they are. Even then I may buy if it isn’t so bad a street and meets my other criteria. I don’t want to own 100 year old houses, no matter what neighborhood they are in.
Rental Property Investor · North Huntingdon, PA · Member since 2011 · 64 posts · 20 votes
6y
When I started I bought rentals in both good areas and not so good areas. 15 years later I am dumping my rentals in the not so good areas. They had cashflow when the tenants were paying but they still weren't worth the hassle IMO.
@Alex Zhao Thanks a lot, I’ll make sure to focus on the lease. Anything in particular should go into it?
I can't really say much since it depends on your property features. But, for example, I have properties in the midwest that have clauses about hurricanes. I wouldn't put that into a clause for a property in California. (Vice versa with tsunamis.)
See if there are state-specific things you'll want to include.
@Alex Zhao Thanks a lot, I’ll make sure to focus on the lease. Anything in particular should go into it?
I can't really say much since it depends on your property features. But, for example, I have properties in the midwest that have clauses about hurricanes. I wouldn't put that into a clause for a property in California. (Vice versa with tsunamis.)
See if there are state-specific things you'll want to include.
Rental Property Investor · New York City · Member since 2019 · 90 posts · 122 votes
6y
@Joe Splitrock Im just curious, can't you just do a better screening on the tenants to avoid having future missed payments? or is it something that is inevitable?
@Joe Splitrock Im just curious, can't you just do a better screening on the tenants to avoid having future missed payments? or is it something that is inevitable?
Better screening will help avoid payment issues. Of course better qualified applicants have more options of where to rent. When I was screening for C- properties, I looked for people with stable job history and good previous landlord references. Still you will find that there can be payment issues. Car breaks down and needs a $800 repair so they can get to work. They will pay for the repair instead of rent. They don't have cash savings for emergencies. I never had major issues with C- tenants. I had late payments, but never lost more than a month of rent, because if they stopped paying, I got them out quickly.
Investor · Brooklyn, NY · Member since 2018 · 20 posts · 95 votes
6y
I'm not sure how you define "bad" but I would certainly invest in a low-income urban area. I wouldn't buy anywhere with a very high crime rate or that doesn't have access to anything appealing (schools, major employers, public transportation, etc). You need safety to mitigate risk and some local institution to attract quality tenants and have a house worth selling one day. There's lots of money to be made in C and D class areas, but you do have to draw the line somewhere. I'd only buy a house I'd be comfortable living in alone for 6 months.