Investing in high cash flowing areas

[Scott Taylor]

I'm interested in investing for high cash flow (getting 20% cash on cash return and up).

Unfortunately this leads me to less than desirable areas.  In my case the areas seem relatively safe (C neighborhood, low crime- definitely not a war zone) but have declining populations and housing prices seem like they will only decline in the near future... (Specifically I'm looking to invest in northern PA around Scranton / Wilkes-barre)

My broker in the area keeps warning me of this - but is buying one of these properties really a bad idea considering I'm going Into this to maximize cash flow and not appreciation?

[Kevin D.]

I can't speak for Lackawanna County and Scranton, but Luzerne County (where Wilkes-Barre is) has had a rising population according to the most recent census data. I invest in and around Wilkes-Barre because I grew up here and I know the area well and like you said, the cash flows are high; Levered IRR >25%. Its not optimal, because you're never going to recognize massive appreciation, but I'm not brave enough to deploy funds to buy an 8 unit building in [insert city here] when I literally know nothing about that city's neighborhoods.

With all of that said, Luzerne County has some really solid pockets where there is a good renter base and enough middle class jobs to keep housing prices growing very, VERY slowly.