Any ever follow the 2% (or more) rule and NOT get burned?

[Pat Jackson]

Hello BP.

A little about me.  I invest out of state, I've done 3 deals, 2 buy and holds, 1 flip.  All single families, all in Missouri.

I'm about to have a 5-unit apartment complex under contract.  Four, 1 bedroom units and one, 2 bedroom unit.  All electric, separate meters.  This is in a new area, new agent, new contractor, new property manager.

The returns would be over the 2% rule.  This summons all sorts of advice I've heard podcasts and forum discussion.  Statements like:

"Juice isn't worth the squeeze"

"Nightmare"

"Not worth it"

From the best I can tell the building is in a C part of town.  I spoke with (from what I can tell) a reputable property manager, and they agreed they'd manage the units.  Google maps doesn't look bad.  I'm waiting to talk to a local police officer, who isn't bound by real estate agent law, and can answer questions about the area.

I realize this area will command a lesser tenant.  Headaches will be more likely.  It may take longer to place a tenant.  In the end, if these are expected, and treated as numbers (say 12% for vacancy and 20% for repairs and cap ex), and the property still cash flows well, am I crazy?  It needs some rehab, I'd likely follow the "bombproof" philosophy.

I don't want to be greedy, but I don't want to pass on a deal just because it's too good.....

Experiences (good or bad) involving small apartments in C neighborhoods much appreciated!