Considering Junky Rentals for Cashflow in Rough Neighborhood

[Loren Souers]

Hi all,

I currently own a class B/C duplex which I have been managing myself for about 4 years. I really want to amp up my investments and have found a couple 1-4 multifamily units in a neighboring city but they are on the the rough side of town. They both seem to cashflow well and are cheap enough to put the 20% down needed. 

I would love opinions on investing in a rough part of town to get things going and receive some cashflow. I would plan to have these managed by a third party as to stay as hands-off a possible. 

[Aaron K.]

The key word here is "seem" they seem to cashflow well, they won't cashflow as well as you think they will, I'd look at total return, some places the rough part of town rises in price with the rest of the city, in others it declines in value because a shrinking population means more people can live in the nicer areas and leave the bad areas vacant.