When looking for an invenstment property, do you consider location?

[Scott E.]

Ok, I know the thread title seems like a no brainer, but allow me to elaborate.

I am following REOs closely and trying to zone in on exactly where I would like to make a purchase for my first invenstment property. Naturally, all of the most affordable properties are popping up in what most would consider a "spotty" or "ghetto" neighborhood.

I know the old wisdom of "location, location, location" when it comes to real estate, but does this also apply when it comes to investments? The issue is that I simply cannot afford buying investment properties in the best areas of Phx. (i.e. Biltmore, Scottsdale, Fountain Hills, Ocotillo, Tempe etc) On top of them being out of my budget in those neighborhoods, the 50% rule seems much more difficult to apply to a $250k+ property, as opposed to a $30-$40k property. Plus, it's not like I will be living in said property anyway, so I don't have to deal with the day-to-day living in that particular area.

What are your guys thoughts and strategies on location when it comes to buying a buy-and-hold rental? Are "bad" areas ok, or would you avoid them? If the recomendation is to avoid them, then is Phx possibly not the best area to buy rentals?

Thanks!