The upside of D class neighborhoods ?????

[Isiah Ferguson]

Hey, BP family. I've notice as a new investor that it seem like everyone is trying too avoid D class hood. I hear a lot of negativity about it. Is their any upside with theses neighborhoods ? What's on the positive end of things ? 

[Dan Bryskin]

@Isiah Ferguson

D area? Why not?

• 1. Worst the neighborhood, better the cash flow. Here, around Minneapolis, house in D neighborhood can be  purchased, fixed and rented for under 100k.  Same house in A would be 400k. In D, I'd get $1300 and in A $2200. Rent increase in going from D to A doesn't justify a price increase. 
• 2. The only way you have to go is up
• 3. Appreciation: Pick a neighborhood up with the chance of gentrifying. Or work just outside a little better neighborhood. If you get it right and if you stay long enough, benefits can be huge.
• 4. Inspect a property you are purchasing for the bullet holes. Don't worry about BB holes, some people ignore .22s. Personal rule - house with the bullet hole(s) is nothing i want to hold long term. Thats a joke with the hint of truth btw.
• 5. Resilience. 4 100k properties will do way better in case of crash / correction then 400k property
• In the crash, people who can't afford their homes rent. People who can't afford rent - move to lower tier. Low tiers are safe as there is always a demand. At times landlords resort to incentives to fill expansive appartments, but there is always a section 8 waiting list.
• 6. You will learn quick
• Not for everybody. They will scare you with "professional" tenants. They got nothing on professional landlords :)

It is all about finding your comfort zone ... Some people are outside of the comfort zone the second they leave Manhattan :)  Good luck.