What does Low-end rental numbers looklike?

[Emily Allen]

Hello! Does anyone rent in lower income area in Atlanta? Given the low inventory +high property price, I am exploring new areas to find multi-family rentals. One of the areas I am looking at rent for $500 per door. I just wonder, if I find an older property (meaning higher maintenance cost), and with tenants paying $500 for 2 bedrooms, is it possible to make cash flow? Can anyone share experiences on low-end rentals?

Thanks!

[Imran Khan]

Hi Emily,

I think the real question is... do you want to be a slumlord?  Profitable... it can be.  Difficult to do... yes it is.  Hope you're stern, carry a firearm, not afraid of walking into "the hood" alone, and have the cash to clean house.  IMHO, these types of properties are best left to experienced investors who look to redevelop a neighborhood.  They have the knowledge, team, cash, and expertise to clean house,  make repairs, attract higher quality tenants, and raise rents.  This appreciates the property value and also the neighborhood. 

The property "as is" may seem like a profitable deal because of the low upfront price.  The hidden costs are in the turnover, eviction, non-payment of rent, damage, numerous trips to the property, etc...   That's going to eat into your gross income that you had originally calculated.  It will leave you with a net you didn't calculate.  What's that saying about real estate...  location, location, location!!!

My advice... save your money, find a better location, buy where it's safe for you and for your tenants.  Personally, I only buy in areas where I would personally live.