Looking to Invest in St. Louis

[Peter Aziz]

Hey there BP,

I've been considering purchasing a multi-unit (2-4) in the St. Louis area for some time. It appears that one can expect a decent cash on cash return of 12-15% in the area, which is MUCH greater than what I can expect investing in my hometown (I'm from Southern California). Understand that I'll be giving up appreciation for cash flow. 

One of the struggles I'm dealing with is the crime rate and the quality of schools in St. Louis. In Southern California, primarily in the suburbs, low crime rates and good quality schools are prime factors I would consider when investing in real estate. Are these factors I should be considering in St. Louis as well, or are the dynamics so different that maybe they don't apply when investing in the city? On another note, with such a high cash on cash return (read low market value / high rent rates), why is there such a strong rental demand? Is the average income in the city so low that the average person can't manage to save $40K to buy a $200K home? Also, any insight on vacancy rates/factors in the city? 

I appreciate any guidance and am happy to connect to discuss more. 

Many Thanks, 

Peter