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!

[Al Williamson]

@Lissette Deleon

You're wise to seek out information. Problem is that many have opinions but no experience in these areas. And if they do have experience, few have been successful.

Long story short, I've worked since 2002 on a neighborhood turnaround. There is nobody, at this point, that would say my efforts haven't been anything less than an overwhelming success.  Properties now sell for $30K - $50K over asking price.

With that said, and with countless posts on the topic here on BP, let me suggest the following:

1 - Look at the trash on the ground. The volume and type of trash will tell you a lot about what's going on in the area.

2 - Find out if a neighborhood association or neighborhood watch group is active in the area.

3 - Find the edge of the good and bad neighborhoods. That's the only area you should consider investing in.

4 - Ask yourself, "Do I have a thick skin?" If you aren't able to bounce back after getting your feelings hurt, then invest in a different area.

If you can bounce back, then you can easily amass $1M in restored equity in an emerging market (inner city neighborhood) by working a long term plan.