Would you rather buy a $40k rehabbed rental in a C neighborhood or $55k in a B?

[Mark Shaffar]

I'm curious about neighborhoods as it relates to turnkey/ buy, fix, hold purchases. Most of us have preferences for A, B, C, or D neighborhoods when it comes to investing and rule out the others. My hunch though is that especially when it comes to having other people manage the property and headaches that we really don't care as landlords about what neighborhood the property we own is in, but rather what the best predicted return on investment is. There seems to be a relationship between better neighborhoods and more rent with less destructive tenants and expensive vacancies, but also an increasing price that tends to go up at a higher rate than the rents. Assuming headache was not an issue, what would be the best long term ROI in a city with moderate economic and population growth? Let's ignore taxes and property management costs. All houses are rehabbed according to code and ready to go.

In this scenario would you rather buy a $25K SFH in a $500/mo D, a $40k in a $700/mo C, a $55k home in a $900/mo B, or a $130k in a $1200/mo A?