Bad Area, Numbers Work - So What? Help Me Understand!
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Hi All, me again! I need help understanding why this deal would be bad. A similar deal discussed raised some valid points but I am not understanding the inherent issue of a "bad neighborhood".
These deals are easy to find in the Cleveland OH neighborhood. I assume, a "rougher" area might have greater turnover (accounted for at 10%), probably more repairs during turnover (accounted for at 10%), need good local property management (10%).
The property exceeds the 2% rule with worst case assumptions (2.38%)
The property meets the dollars per door, $175
Cash on cash hits 22%
Fully refurbished (actually quite nice) and clear inspection report including large items.
I am not looking for appreciation, simply cash flow. Demand seems high in the area so exiting shouldn't be difficult. I am not living there so a "rough" neighborhood has no impact on me.
What am I missing? Seems like great cash flow all things considered.
Also, this would be my very first real estate investment. Low cost of entry, I figure I will learn a great deal.
Help BP!