***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?

The whole reason why some investors choose Class C or D neighborhoods is because the ROI is generally much higher in return for all the expected headaches and more constant management issues.

Obviously it’s like a lot of larger cities where a couple blocks could change you from a “b” class neighborhood to a “C-“ or worse.  

Consider the increased maintenance and tenant issues you may face with C or D class homes in that price range. 

I'm an advocate for investing in more than one thing because it's not like betting on black or red and then you get one spin; in our game if you bet on black and red then you can take your profits when red hits (REI) and later on you take you gains when black hits (Stocks).Tyler

So you've got roughly a 75% chance of having your HOA vote to ban your short term rental.So when a first time investor asks me about this, after telling him all these details I ask “Does that sound like a scenario you’d want to make a $200k bet on?” 

Goes directly on your 1040 on C or E. 

Only seasoned investors should be attempting these types of deals.What you could do with $20,000 though is use it as the down payment on a nice $70,000-$80,000 duplex in a C or B neighborhood.

Class C or above.

***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?