Should You Purchase Rental Properties in a D Class Neighborhood?

I’ve discussed the difference between A, B, and C neighborhoods, and explained why my favorite investment properties are in C neighborhoods. But what about D neighborhoods? Can you make a safe and profitable investment in a D neighborhood?

Personally, I do not own any properties in D neighborhoods. In D neighborhoods, you’ll see higher levels of crime. The homes will be more dilapidated, maybe even abandoned. These properties typically need a lot of renovations.

Just because I don’t own properties in D neighborhoods doesn’t mean that you shouldn’t. Every investor has a different strategy. In fact, I’ve known investors who have entirely transformed neighborhoods by renovating multiple properties.

That’s exactly the strategy I would employ if I were going to purchase a D class property. I would pick up multiple homes on the same street in order to make it a better place for my tenants to live.

In short, it’s possible to have a successful investment in a D neighborhood. There’s potential for increase in value, and if you can make a neighborhood a better place, I think that’s a win-win. You might even assist that neighborhood into transitioning into a C neighborhood. I would rather buy a few properties in a D neighborhood than an A neighborhood, that’s for sure.

What is your experience with purchasing properties in the different neighborhood classifications? I’d love to hear your thoughts!

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