Thoughts on C-Class Neighborhoods

[Caleb Godsey]

Hello Bigger Pockets community!

I'm curious about people's thoughts on and experience with C-Class Neighborhoods that you've invested for BRRR rental properties?

I have a market that seems to stack up as far as numbers but my final concern is regarding the type of tenants that the area will attract. 

As far as numbers I could get a home in the $50k range and rehab it with around $10k-15k and average rent in the area would be around 850-900 for a 3/1 or 3/2 SFH. If we're applying the 1% rule, we're actually closer to around 1.5% or so. So numbers are good.

My question is, will the area and the tenants it attracts end up causing more headaches than the numbers are worth? Anyone with experience that can help would be greatly appreciated! 

As a point of reference this is the article I'm referring to when I talk about C-Class neighborhoods. 

Thanks for the help!

[Nicholas Weckstein]

I personally like C class neighborhoods. I think for cash flow they are best. Using the BRRRR method is also the best way to tackle C class neighborhoods.

I think in those areas some of the houses are a bit old, and require some work. So getting in and rehabbing will cut your expenses down over time.

As for the type of tenants you’ll attract I think that if you have a nice unit and screen well you’ll get good tenants. C class doesn’t mean ghetto and poor. Mostly just working class. Which is good. You’ll likely always have tenants to rent to.

Just screen properly and offer a nice unit.

It’s an interesting sliding scale.
A class usually has no cash flow
B class has some cash flow but with the premium that your paying for a low cash flow. It’s still mainly an appreciation play
C class is great cash flow and entry price
D class is likely to be the highest cash flow and lowest price but you might need a bulletproof proof vest to collect rent.

C class and B class are my favorites.