Quantity vs Quality Rentals

[Alexander Merritt]

Hello BP!

When first starting out using a Buy and Hold strategy and with limited capital, do you think it's better to purchase a bunch of lower priced properties in lower quality / depressed areas or spend a little bit more but have less quantity or rentals (but presumably higher quality tenants) for properties in an area that is well known for being a "good" area?

When I say "quality" i mean the quality of the neighborhood, and not necessarily the property.

For example I am looking at a property that is being short listed for 20k fully renovated (zillow estimate is 35k) but it's in a depressed area with a few rowhouses boarded up around it, but there is an existing tenant there and the rent, cap rate, and cash flow look excellent on paper. As opposed to another property in the 60-80k range that's not as nice rehab wise but is in a much better area that is known to have medical job types that would still have decent cash flow. Buying cheaper means more properties but probably the possibility of less desirable tenants in that area. 

Thoughts? Thanks in advance.

[Jay Hinrichs]

@Alexander Merritt 

  IMHO low end rentals are only suitable for local investors that are in the landlord business and are going to scale up and own as many as they can get 100's have your own PM and maintenance and that's the ONLY way in my mind that stuff will work over any amount of time.

buy the best that you can if your just starting out.