How do you Manage in bad neighborhoods?

7 Replies

I am looking to buy a second multifamily in Chicago, I have been searching far and wide and it seems that I can only afford the higher crime areas of the city. Have you invested in these areas? If so how do you manage them? Do you use a management company? Do you self manage and go there to collect rents?

I need some help to decide how I want to expand my areas. If I see a good deal in a high crime area, how I would go about managing it.

Thanks in advance!

If you are inexperienced a PM would be your best option. There are PMs that specialise in D class properties. They are extremely manage intensive unless operated as a slum property. 

Landlords do not chase down tenants to collect rent. Maybe hobby landlords but professional landlords do not collect rent.

@Samuel Liapis There are some opportunities in pockets on the south side, you just have to choose your neighborhoods and streets wisely. We're investing in South Shore and Woodlawn, using professional PM that specializes in this area. I also know a few different people who self manage in rougher neighborhoods. One focuses on 4 plexes, the other around 10 unit buildings, both are investing in the rougher neighborhoods. They claim that tenant selection is super important (of course) and they are smart about when they visit the property. Not for me but they seem to make it work.

Why would you spend your money in a BAD neighborhood and in a city where the law is in favor of the tenant? That just screams you're not going to win. 

Keep your money in your account. Save until you can invest in a good area where you can get decent tenants, I didn't say good tenants but decent to lower the barrier of entry. 

If you don't live in the city you will be making blind decisions. Your best best would be to invest in places like Bloomington IL or Champaign where the prices are low and the crime is relatively low. Chicago is TRICKY as hell, and really does vary block by block.