where do you draw the line on investing in "ghetto" property?

[Mike Wallace]

There is a pretty nasty area that is a few blocks over from a condo complex I just bought a condo in. The condo complex and no vacancies, is kept up decent and does not seem to have many problems.

What worries me is the nasty area that is a few blocks away. Which consists of some burned out houses, people wandering around aimisly at all hours of the day/night. Surprisingly the crime in this area was much lower then expected when i looked up the stats.

[Pete T.]

It depends on your personal preference. Typically, cheaper neighborhoods show better numbers, but normally have more losses due to damage, more repairs, more vacancies, and possibly a worse tenant pool and less appreciation. But those things can change too. Usually the reputation of the area is more important in the present than the reality (ie- the "war zone" neighborhood might not have the worst crime, but gets horrible rents bc everyone "knows" its horrible OR the area w/ the "best schools" that might not have the best stats, but everyone considers superior drawing a waiting list of tenants trying to get in).