Buy/hold in crummier/higher crime areas

[Erik Pfundstein]

Hi guys/gals,

I am new  in terms of posting to the website, but I have been listening to the podcast for a while and I've been doing my  education  and research.  My wife and I are both  medical professionals  and we make a decent income but we would really like  to get into real estate investing within the next couple years,  primarily  buy and hold multi family properties. We live in eastern Massachusetts and the pricing for multifamily homes or single-family homes are pretty high  in comparison to the rental income except in some of the more urban  and higher crime areas. 

 My question is I'd like to get some opinions on whether it's a good idea or not to invest in rental properties that  on Trulia for example are in the yellow for crime.  I'm also not quite sure if the property values in the higher crime areas will rise at the same level as the surrounding towns.

 In these areas the numbers do you work and some are around the 2% rule,  just estimating... 

 Looking forward to hearing your thoughts ! 

Erik

[Chris Jensen]

Erik, there are certain pros and cons of investing in higher crime neighborhoods. For buy and hold I personally have never considered it. Mainly because of the higher turnover, higher vacancy, more hands-on property managing experience you typically hear about. For that kind of investment I just wouldn't risk it. Unless of course there's a big redevelopment initiative in place and you can get ahead of the redevelopment.

Now those neighborhoods can be good for flipping because there tend to be more value add opportunities. I'm working on a few such examples. But we're very focused on the specific neighborhood and solid comps.

Hope there are a few nuggets in there. Good luck!