Juggling property quality & optimistic numbers.

[Jake Maxey]

Hello everyone,

I have never participated in an internet discussion before but I figured BP is a good first go. I am a new aspiring investor currently house hacking my first duplex I purchased at the start of the new year. Ready for a second deal, I have come across a private sell in a slightly sub-par area of town (I would guess C to C- neighborhood) close to the older down town/industrial district (I live in Hobbs, NM, an oil and gas town hugging the west Texas border). The property consist of 5 - 460 sqft individually built units. Four units are currently rented @ $500/month, and the 5th unit requires a total interior renovation before it can be occupied. The seller has no disclosed asking price, he simply asked me to make him an offer. Financing options are broad; owner financing and taking over the mortgage with a cash payment have both been suggested by the seller. My area of uncertainty has to do with the lower quality property in a lower income neighborhood. My first purchase was a 1% deal in a great part of town where the rental demand is solid. Obviously, applying the same 1% cutoff  to a property in a C- neighborhood is dangerous. If any of you have been presented with an appealing deal in a less appealing neighborhood, how did you adjust your numbers game accordingly? Thank you ahead of time for your input.