Unsure about getting into class C and D neighborhoods

[Sarah Moore]

I have an opportunity to purchase a portfolio of ~120 units in a class D area. The properties would need some renovations as tenants cycle out, but the whole comes fully rented and with a management team in place. I'm not sure how to determine if I should be open to shifting my buy box out of the B and C markets. Any advice on what to consider in making a **** like this? 

[Greg Ruff]

Hi Sarah, I haven't had experience with this myself, but I do work with an investor that's actually focusing on those types of investments right now considering them to be more stable because of the guaranteed rent deposited through section 8 housing. There's typically less turnover with tenants, and it's easy to fill when they do turnover. I would definitely start by checking what % of units are receiving some sort of housing stipend or what programs may be available to them. The downside to this approach being less upside potential on raising rents over time if rents continue to climb. Hope this helps!