Seeking to understand why high crime markets are recommended for multi-family

[Erik Aybar]

I recently heard on BiggerPockets podcast about Cleveland and St. Louis areas being recommended for multi-family real estate investment. I don't recall the episode but I think it was the economist from Zillow. 

As I browsed around looking into these markets the prices are appealing, but it jumps out quickly that they have high crime rates. I've seen a lot of conflicting advice that cautions to avoid areas with high crime rates due to complications and extra costs from the tenant base and property crime.

I understand that both cities have shown crime rate improvements, but their overall rates are still way above average.

What makes these cities attractive for investment despite this? Would you caution new investors away from these types of markets? How do you factor in crime rates when researching markets?

[Ryan Arth]

Quote from @Scott Mac:

St George Utah,,,,Cleveland--we aren't in Kansas anymore.

@James Wise has a youtube chanel devoted to learning about the realities of inner city investing. Take a look, and it's no St George.

Good Luck!

 To my point, that is a very specific type of investing, and obviously the worst of it is being shown for entertainment. It is not indicative of what the majority of investors, in this market or elsewhere, may experience. 

Even the generalization that out of state investors want the cheapest properties with the highest yields isn't entirely true. I have an out of state client here who doesn't own a property that leases for less than $3,000/door.