Overview of The Worst Rental Properties to Buy (We’d Never Invest in These)
In this BiggerPockets Real Estate Rookie episode, Ashley Kerr and Tony J. Robinson break down the types of rental properties they would avoid, especially for beginner investors. The core message: some deals can look great on paper—cheap purchase price, strong rent-to-price ratios, fewer competing buyers—but hidden risks like crime, HOA restrictions, flood insurance, limited appreciation, or negative cash flow can turn them into long-term headaches. The hosts emphasize doing deeper due diligence, stress-testing worst-case scenarios, and choosing properties that leave room to pivot.
Main Property Types the Hosts Would Avoid
1) Properties in dangerous or D-class neighborhoods
Ashley and Tony explain the rough neighborhood classes in practical terms:
- A-class: luxury, top-of-market rents, best amenities
- B-class: still solid, slightly less premium
- C-class: more working-class, lower income, less desirable school districts
- D-class: high crime, distressed housing, lower-income tenants, weak growth
Why they avoid them:
- High turnover and tenant instability
- More crime and drug activity
- Weak or limited appreciation
- Higher maintenance needs without enough rent upside
- Potentially higher insurance costs
Ashley’s experience:
She bought a D-class duplex for $37,000 that rented for $1,400/month, which looked amazing on paper. In reality, she dealt with frequent turnover, job loss, evictions, cash-for-keys, crime, and little opportunity for meaningful value-add renovations.
2) Properties with the wrong neighbor, even in a decent neighborhood
Tony notes that even if the broader area is fine, one bad adjacent property can cause problems:
- Theft or vandalism
- Illegal activity next door
- Higher management headaches
- Tenant discomfort or lower demand
Due diligence tip:
Drive the area at different times of day and look closely at the immediate surroundings, not just the neighborhood average.
3) HOA-controlled properties
The hosts are cautious about HOAs because they reduce investor control.
Red flags:
- Rules can change by vote
- Restrictions on paint colors, use, rentals, and guests
- Special assessments and rising dues
- Potential bans or limitations on short-term rentals
Tony’s note:
HOA dues can be manageable in some places, but in other markets they can become so high that traditional long-term rentals stop working.
4) Properties with only one exit strategy
These are deals that only work if your original plan succeeds.
Examples:
- A property that only works as a short-term rental
- A deal with a prepayment penalty that makes refinancing expensive
- A flip that would be unprofitable as a rental if the sale falls through
Key point:
It’s okay to buy a property with one exit strategy if you know that upfront. The mistake is assuming you can always “just pivot” without proving the numbers.
5) Properties in flood zones
Flood zones are a major warning sign because insurance can change drastically.
Why this matters:
- Flood maps can be reclassified
- Insurance premiums may triple or quadruple
- A once-profitable rental can become cash flow negative overnight
Ashley’s experience:
She had a property where flood insurance jumped from manageable to about $1,700/year, destroying the cash flow.
6) Very rural properties
Rural deals can look cheap and attractive, but they often come with structural problems.
Common issues:
- Limited appreciation
- Small tenant pool
- Higher turnover
- Fewer contractors, cleaners, and maintenance workers
- Difficulty scaling repairs or rehabs cost-effectively
Ashley’s experience:
She bought rural duplexes for around $20,000, but maintenance was constant and appreciation was limited unless the timing was perfect. She did eventually benefit from a strong market run-up, but she says that outcome was luck, not a strategy to rely on.
7) Properties that do not cash flow
Tony and Ashley are very clear here: for most rookies, buying a property that loses money monthly is a bad idea.
Why they avoid negative cash flow:
- It limits your ability to scale
- Unexpected repairs can compound the losses
- Vacancy or nonpayment can quickly make the deal painful
- Appreciation is never guaranteed, especially in the short term
Exception:
A high-income investor who intentionally wants an appreciation play may tolerate temporary negative cash flow, but that is not the typical beginner strategy.
Biggest Takeaways for Rookie Investors
Don’t be fooled by “cheap”
A low purchase price can hide:
- High turnover
- Expensive insurance
- Limited rent growth
- Weak tenant quality
- Major management headaches
Cash flow and flexibility matter
The hosts stress that beginners should generally prioritize:
- Positive cash flow
- Conservative underwriting
- Strong reserves
- Multiple exit strategies when possible
Due diligence should go beyond the numbers
You should verify:
- Neighborhood quality and crime trends
- Flood risk and insurance costs
- HOA rules and dues
- Rent demand in that exact submarket
- Whether the deal still works under a worse-case scenario
Notable Practical Advice
Ashley’s recommendation for risky neighborhoods
If you must invest in a rough area, she suggests targeting Section 8 tenants because:
- Payments are more reliable
- Tenants tend to stay longer
- Annual inspections help maintain the property
- She says she’s never had to evict a Section 8 tenant
Tony’s recommendation on neighborhood research
- Visit at different times of day
- Check surrounding properties, not just the subject property
- Make sure your backup strategy is real, not assumed
Final Message
The episode’s main theme is not “never buy risky properties,” but rather don’t let a seductive spreadsheet override reality. Cheap, high-yield, or unconventional deals can work—but only if the risks are understood, priced in, and manageable. For rookies especially, the safest path is usually a property that cash flows, has strong tenant demand, and doesn’t depend on everything going perfectly.