I have been looking around for my first property and have come to the conclusion I just have to wait to save up a down payment. I started looking in some not so great neighborhoods and noticed these houses and trailers are really cheap. I can actually afford the down payment. One double wide is on the market for 20000, and is in need of some obvious rehab. My reasoning behind wanting it is, it’s such a low price I can afford the down payment, I can learn some of the rehab, and I won’t be in for that much on my first deal. However it’s in a not so great neighborhood, does the neighborhood and type of tenants outweigh the amount of knowledge and experience I can gain from taking this deal. I figure I can start cheap and learn for cheap figure out my exit strategies so I don’t lose too much, and try to figure this out so I can finally move forwards.
The numbers are 19,900 listed price, 4000 down. Average monthly payments of 150 towards mortgage. The area can easily rent for 550-650. Maybe 10000 in rehab, a lot of it will be sweat equity so it may be cheaper. I potentially want to brrrr the property and comps in the area are around 40000 to 60000. My main question is, are bad neighborhoods the absolute no go in real estate? Even if it’s just my first deal and so cheap?
You're rationalizing a bad deal.
Bad neighborhoods aren't the place to start your investing. You'll learn a lot of things defined as "what not to do"...which, although important, not valuable at all if you run out of money...and still don't know what "to" do.
Keep looking, and learn how to find markets (not properties), how money works (strategies for moving money through deals), and don't start moving your cash until you have a plan. The plan should be based on your financial goals (specific goals), not the typical arbitrary "flip 3 properties and buy one per year" plan...which isn't a plan at all.