Who has started or makes their money off of the low income areas?

[Ryan Dossey]

Just as in any other business venture you have to way the risks vs the rewards. Those of you that have successfully started or successfully invest in low income areas what are your thoughts. It's no secret that the low income properties offer better cashflow with little appreciation. At the same time it seems like it may not be a bad place to be. I am a big fan of diversifying investments and am curious to learn from your experiences. I know a lot of it comes down to tenant screening. 

[Michele Fischer]

Ryan, my husband and I started with and are still in low income property. We liked that we could purchase several properties quickly. We have learned a ton. Tenant selection is key, but can be a challenge when there aren't a lot of qualified applicants in the pool. Turnover is high, low income seem to be more transient. Chasing rent and dealing with turnover is way more time consuming in the low income bracket. We are spending money we thought we could spend on upgrading the neighborhood and properties on replacing the same items over and over and over due to neglect. Recovering funds after move out is near impossible; we send it to collections to try to warn other landlords, but they have no credit to protect and no money to pay. This is a bit of realism, but it's not all bad. Even in the worse years, we are making money. Not quite 10 CAP this year, but we're pretty close on average. Making cash flow even with all the costs, and paying down the loans. And plenty of blog and book fodder and stories for parties! :)