Rentals in not the best areas?

[Lissette Deleon]

Hello BP Community,

I am currently looking at properties for my first rental. I see that there are properties that are located in the not so good areas. Does anyone own rental properties in areas that are not necessarily the best? If so, how do you minimize your risk for getting bad tenants? Is it even a good idea to look in these areas?

I would appreciate any input. Thank you!

[Ron Flatt]

Wow, lots of good points from both sides.  IMO.  

I stay out of War Zones... but I do like the poor neighborhoods, I am looking at upper low income and low mid-income.  I do not do Section 8 housing, they have too much floor time).  

Most of my properties are C properties, they cash flow great, with moderate appreciation.  Yes, you have to screen your tenants, but when you have a great tenant and you continue to add value as you raise your rents they stay and are appreciative.  I have some of the same renter for 15 years.  I have some inherited tenants, that appreciate that I take care of maintenance and do try to improve my properties.  

It is a relationship business.  My brother likes going into war zones, but he usually is buying several houses in the same block.  He seems to like the confrontation and redeeming an area.  Now that he is retired and has the health issues of growing older, he is selling some of these and I notice he is buying in B areas now.  

The thing is he got his cash flow and start in the rough zones, he does not need to reinvest but he enjoys real estate, but he does not need the confrontation now.  

[Al Williamson]

@Hau N. wow there's so much to unpack. I'd need to post my whole book.

But I'll try...

1- needles are bad. Fast food litter is better. But there's so much more in between. Interpolate the behavior from the litter. 

2- a watch group, in any form, is good. Don't start from scratch.  Investors should help groups gain momentum. 

Those are my general rules of thumb. The info needs to be overlaid to find the sweetest spots. 

[Kathleen Leary]

My properties are in the, um . . . "less desirable" parts of town. Granted, it's a small town, not a true urban area.

Everybody's got to live somewhere! A nice, clean place to live is a god-send for a lot of potential tenants.

There are nice folks & jackasses on the same street, no matter where you go. The "nicest" neighborhoods have drug houses & the so-called "bad" areas have decent, hard-working people who would help out a neighbor in a heartbeat. You just have to know your area & choose carefully.

Above all, my advice is: SCREEN, SCREEN, SCREEN! I've had many really great tenants, but I've left property vacant longer than I'd like until I got the right fit, tenant-wise.

[Jaysen Medhurst]

@Lissette Deleon, I was looking in Westerly, RI and Pawcatuck, CT a while back and saw some attractive properties. Probably a better place to get started.

[Linda S.]

@Lissette Deleon,

As many people have mentioned, it's a whole different ball game dealing with rougher neighborhoods.  There is absolutely money to be made, and people are people--regardless of their income!    I always tell new people 1 thing-- YOU pick the tenants!     YOU are the one in charge of determining if someone can pay long term, or if they will have problems, it all boils down to screening.    Don't like obvious drug dealers?  Good-- don't rent to them! 

I will say, as we're renting a duplex unit on a C- street now, your common sense/BS detector needs to be SIGNIFICANTLY higher than normal with this type of rental, and you need to go for durability with materials..  I wouldn't suggest it as your first property, but if you're up for the challenge it can be done!    

[Dylan F.]

Originally posted by @Robert Westbrook:

I'm a wholeseller here in the DFW marketplace and one of our investors loves to buy homes in our rough neighborhoods, Fairpark. He buys for 30k puts 20k into them and the rents them for 900 a month. He's getting great return and as long as you have a property management group that is local to the area you typically don't have many issues. That's not to say there aren't risks involved, there are always risks in rentals.

This is precisely what I want to start doing... would love to connect. Does this person mentor by any chance? (I'm reaching here, I know)

[Robert Westbrook]

@Dylan F. I'd be happy to have you come in the office and Show you a bit how our business works. We have an office in Hurst which should be closer to you. I typically sell properties to investors but I can show you how you can get started in this wild world of Real Estate. 

[Jesse Hargrove]

@Lissette Deleon Bad areas are not all the same. Look at the crime rate. That will tell you a lot. The most important

person in your team will be your property manager. I would suggest looking for that person first. I visit your area in RI. often and it can not be compared with Large areas of the country with millions of people.  

[Michael Plante]

I have owned, rehabbed and rented in bad areas and was very happy with my returns

If you plan on doing this by yourself I would think about it three times and weigh your safety against profit potential

Completely unfair but the gender of property manager is something to consider in my opinion 

[Nolan M.]

https://www.biggerpockets.com/renewsblog/2016/06/0...

Here's a great blog post regarding this topic, good luck!

[Deanna McCormick]

Eloborate on trash,, if a tacky couch is on the porch,, if a mattress is on side of garage,, if old fridge is hanging out.. if the alley looks like a war zone.. grafitti... 

Keep driving.. until you see a noticeable change.. 

Neighborhood watch isn't a good sign unless your neighborhood need's it then it's a better than not having a neighborhood watch.

Safe officers are assigned to problematic neighborhoods and are super contacts to find out what's going on in area's

Call about how many police calls are in the neighborhood or for direct address before you buy.

Check how many registered sex offenders are listed