Are your rentals typically in "bad" areas?

[Henrik Frank]

Looking at the SoCal prices, it seems most areas are very far from being able to offer rent / price ratios that would satisfy the 2% and 50% rules. In my complex (Newport Beach), a $700K townhouse typically rents for $2700-$2900 and you have $350 in HOA. You would have to the house for less than I paid in '99 to have positive cash flow. In Palm Springs, Palm Desert, it looks like you could possibly come closer to the 2% and 50%, but still not quite. However, in "less desirable" neighborhoods (I'm looking at Desert Hot Springs and Indio), it seems you can come much closer. Prices are lower (some rehab typically needed), but rents aren't that much lower.

Do you find that low income neighborhoods make for better rental investments?

Thanks!