Author Topic: If You Could Do It Again Would You Purchase Low-Income Rental?  (Read 2527 times)

freeazabird

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For those of you with rentals in low-income neighborhoods, if you had it to do all over again would you do it? Or would you prefer properties in higher income areas?

mooreprop

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #1 on: August 27, 2014, 12:33:32 PM »
I  have already answered that question in real life by selling all my low-income rentals in 2007 thus changing my life for the better.  (did a tax deferred exchange into medium income properties.)  High income usually does not have sufficient cashflow and has more demanding tenants, so the only high income property I own is a vacation rental.  The new rentals are mostly single family houses where my tenants are either professionals or solidly blue collar, hardworking people.   It was a great learning experience in how to manage rental property, so I would recommend buying a couple of really cheap rentals when you start out to make your mistakes on a smaller scale.  However, if you already have experience in managing rentals or have a good mentor, I would say to run the opposite direction when someone offers you a good deal on a property where you will not be able to get tenants that you would choose as friends. 

I would not have purchased those properties if I had it to do over again.

Timmmy

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #2 on: August 27, 2014, 12:38:52 PM »
Subscribing for reference since I am planning to turn my current (low-income) house in to a rental. 

Rezdent

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #3 on: August 27, 2014, 05:51:19 PM »
I probably would.   But I LIVE in the same lower- income neighborhood.  It's not a complete ghetto but it is lower income.  We might trade up as we deleverage but it's worked well for us.
I think it's more important to do the due diligence around screening no matter what neighborhood.  Example: we have 2 tenants that are similar in age and family size.  One of them is a millionaire and we just got notified that the other one is in bankruptcy.

Guess which tenants have NEVER been late with the rent, have immaculate housekeeping, promptly report any maintenance issues and offer to help with repairs?
Of course it's the ones that are in bankruptcy. The other one has been late, has not reported issues until major damage occurred, has had neighbors call the police on them,  etc.

plantingourpennies

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #4 on: August 27, 2014, 06:51:35 PM »
We own in an area that would be called low-income, but we also used to live in the same neighborhood. If I could buy another 5 at the price I did in 2010 I would!

Like Rezdent mentioned, pre-screening has been critical to our success as landlords.

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Mr. PoP

Bobberth

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #5 on: August 28, 2014, 01:19:31 PM »
Yes I would and I continue to buy there.  My rentals are lower income working class-the people that live there have $10-$12/hour jobs and average around $25k a year in household income.  Like most things, there is a long continuum instead of just black & white.  That is especially true with "Low Income".  Working people care about living in good places and I like to provide those good places to good people (screening) while earning higher returns.

arebelspy

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Re: If You Could Do It Again Would You Purchase Low-Income Rental?
« Reply #6 on: August 31, 2014, 12:31:19 AM »
Yes.

I'd also purchase my nicer ones.

I like having a mix of properties and tenants. Sort of a diversification of rentals, if you will.
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