Would you pass on a 20k house that rents for 500 a month?

[Aaron Hollingshead]

I wanted to get some feedback.  I've been doing flips and buying rentals for three years now.  I currently have 7 rentals and am closing the sale of my 5th flip.  I feel like I've got my flips dialed in but I haven't developed a criteria so to speak for my rentals.  

So here's my question...there's a small 1 bed, 1 bath on the side of town where I'd previously thought I didn't want to buy.  Values are low, crime is higher, etc...the thing is, this house is off market, being offered at 20k and is currently rented for 500 a month.  So I'm a bit torn.  It's hard to walk away from a place that is in good shape (new roof, new service, stable renters) with those numbers.  On the other hand, it's in a part of town that is questionable.  

Will jumping on this versus walking define my criteria?  Thoughts?  

[Joe Villeneuve]

Rent means nothing.  What's the cash flow.  If the CF isn't at least $300/month, I'd say this is nothing more than a shiny object of distraction.

Now, onto the real question here.  What you need to do is develop a criteria for buying hold properties.  Base it on your financial needs (i.e...monthly bills)...and stick to it.  Once it's set, don't rationalize your way into a lower number just because.  If your number is a minimum of $300/month, and a property comes in at $299/month...go onto the next one.

Lack of discipline resulting in a REI negotiating against himself is a big problem...and I see it way too often.