Is Now the Right Time to Start?
Member since 2025 · 7 posts · 6 votes
Is Now the Right Time to Start?
Most Popular Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votesThe Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.
This couldn't last forever, and it didn't, as excited new investors drove up prices.
Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.
So, the flood of new investors switched to buying Class B properties.
COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!
Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).
Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.
In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.
If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.
Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results. In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:
|
FICO Score |
Pct of Population |
Default Probability |
|
800 or more |
13.00% |
1.00% |
|
750-799 |
27.00% |
1.00% |
|
700-749 |
18.00% |
4.40% |
|
650-699 |
15.00% |
8.90% |
|
600-649 |
12.00% |
15.80% |
|
550-599 |
8.00% |
22.50% |
|
500-549 |
5.00% |
28.40% |
|
Less than 499 |
2.00% |
41.00% |
According to this chart, investors should use corresponding vacancy+tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.
To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.
Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.
We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.
We're over in Metro Detroit - where you can still find cashflowing Class B rentals in the Ring Cities:)
Logical Property Management4.9450 Reviews
24 Replies
- Attorney · UT · Member since 2025 · 55 posts · 46 votes1y
It kind of depends on your risk tolerance, and if you have an emergency fund or can generally survive in case things go south.
You could see if there are any sellers willing to do seller finance or maybe a subject to deal.
Or if there is a rental property with a tenant, you may be able to get a DSCR loan if a traditional mortgage may not work for you.
You could look into short term rental arbitrage or wholesaling properties.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
- Lender · Member since 2021 · 495 posts · 130 votes1ySome of those areas actually get better cash flow than elsewhere in the state for what it’s worth.
Quote from @Mark Morosky:
Looking to invest in my first property.
We've been doing plenty of research but the market in SW Michigan seems high for what the properties actually require to get to a decent rental status and get some decent cash flow.
Is this me just being hesitant to dive in?
We have cash but not enough to put down major down payments in many of the properties.
Should we look more in the BRRRR method or focus more on cheaper properties and refi/resell? Any leads or ideas from anyone?Looking in Southwest Michigan (Kalamazoo, Battle Creek, Marshall, etc.)
- Member since 2025 · 7 posts · 6 votes1y
@Andrew Zamboroski experience in the area?
- 1yBryce JamisonPro MemberRental Property Investor · Mebane, NC · Member since 2015 · 493 posts · 439 votes
With today's interest rates I'm also finding it harder to find properties that are profitable anywhere near the asking price. There's a few things you can do to help tilt the numbers in your favor. Even if it seems low, only submit offers that work for you. Most sellers won't accept, but maybe a few counter and you end up negotiating something that works for you both. Part of this negotiation could be them buying down your rate, or even better, seller financing like @KC Ushijima mentioned. Also like you said, you may have to put a little more into a property for it to cash flow. Some argue this is buying you cash flow, but with interest rates in the high 6s I look at it as putting money into a savings account with a 6% rate.
If you have a reliable crew you have time to manage, or you can do the work yourself, BRRRR could be a great option for you too.
Finally, you said "cheaper properties". The numbers tend to look better for these properties, but what doesn't show up in an Excel sheet is the potential headache of a class C or lower property. There's deals to be had in that area, but maybe not the best choice for your first investment.
- 1yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
It's always a good time to start. Always. You just need to adjust your expectations and goals a bit. Maybe this is the time to buy a serious fixer? Or go the STR route? We can't say from outside the bubble, but start looking at all of the various sub-markets within this huge RE industry.....there will always be something that works.
- 1yRyan PorterPro MemberReal Estate Broker · Jackson Ms · Member since 2019 · 35 posts · 26 votes
Yes, the time is now. Life doesn't wait for interest rates. Find a local mentor, and start putting properties in the calculator. You will likely strike out on the MLS finding anything decent. I would join some local investment groups and hook up with the wholesalers in your area. Also, introduce yourself to as many real estate agents as possible and let them know you are looking. The good news about high rates is that deals can be found. Just make sure and quadruple-check your numbers. Find a deal that works for you on paper. I have been doing this for 9 years and still get nervous about most of my deals. Just make sure the math adds up for the 2 exit strategies. If you plan on getting a rental, ensure it is sellable for a quick profit. If you are flipping, make sure you can rent it if it does not sell for a nice return.
- 1yLoren SouersPro MemberReal Estate Broker · Portage, MI · Member since 2015 · 50 posts · 12 votes
I also invest in SW Michigan. It is a good market compared to many areas of the county. Find more potential deals, make more offers, and take a leap. Every deal cannot be a home run. I have this problem too. Focus on building. I just had a friend by 3 houses in the last 4 months off MLS. Again, not home runs but solid investments.
- 1yJaron WallingPro MemberRental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
@Ryan Porter Speaking of striking out on the MLS... are you spending $$$ on marketing for off market leads? Working with wholesalers? Or simply doing a combination to find opportunities?
We're striking out constantly and it's probably because we're not throwing money at any marketing. Sales is not my strength. Wholesaling RE has not been a personal goal. We're BRRRR investors so it's been tough.
- 1yRyan PorterPro MemberReal Estate Broker · Jackson Ms · Member since 2019 · 35 posts · 26 votes
Quote from @Jaron Walling:
@Ryan Porter Speaking of striking out on the MLS... are you spending $$$ on marketing for off market leads? Working with wholesalers? Or simply doing a combination to find opportunities?
We're striking out constantly and it's probably because we're not throwing money at any marketing. Sales is not my strength. Wholesaling RE has not been a personal goal. We're BRRRR investors so it's been tough.
I concentrate on three areas that I love to flip in: text, call, postcard, and email. Every 3 months, they will hear from me in one of those forms in rotation. Most of my best deals have come from referrals, though. I constantly let my sphere know I am flipping homes through social media. I got a nice lead this morning from one of my construction companies. Also wholesalers. May I love those guys. They underprice things a lot. Not as much as they overprice, but deals can be found.
I have bought two homes off of Upnest this year. Those are Realtor.com seller leads. Upnest is designed to get real estate listings, but sometimes people want to hit that easy button and sell for cash without having to deal with the public market.
- 1yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.
This couldn't last forever, and it didn't, as excited new investors drove up prices.
Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.
So, the flood of new investors switched to buying Class B properties.
COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!
Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).
Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.
In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.
If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.
Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results. In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
According to this chart, investors should use corresponding vacancy+tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.
To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.
Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.
We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.
We're over in Metro Detroit - where you can still find cashflowing Class B rentals in the Ring Cities:)Logical Property Management4.9450 Reviews- 1yRyan PorterPro MemberReal Estate Broker · Jackson Ms · Member since 2019 · 35 posts · 26 votes
Quote from @Drew Sygit:
The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.
This couldn't last forever, and it didn't, as excited new investors drove up prices.
Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.
So, the flood of new investors switched to buying Class B properties.
COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!
Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).
Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.
In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.
If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.
Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results. In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
According to this chart, investors should use corresponding vacancy+tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.
To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.
Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.
We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.
We're over in Metro Detroit - where you can still find cashflowing Class B rentals in the Ring Cities:)In Jackson, MS, the "class C rentals" are usually built in the 1950s and 1960s. After that, they have been patched on, painted over, glued shut, and oiled infrequently. The homes are just in bad shape. Which in turn, you will likely have a bad renter. The newer, nicer homes that don't have over three mainace calls a year usually tend to attract the better tenants.
- New to Real Estate · Trappe, PA · Member since 2025 · 7 posts · 7 votes1y
Quote from @Drew Sygit:
The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.
This couldn't last forever, and it didn't, as excited new investors drove up prices.
Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.
So, the flood of new investors switched to buying Class B properties.
COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!
Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).
Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.
In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.
If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.
Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results. In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:
FICO Score
Pct of Population
Default Probability
800 or more
13.00%
1.00%
750-799
27.00%
1.00%
700-749
18.00%
4.40%
650-699
15.00%
8.90%
600-649
12.00%
15.80%
550-599
8.00%
22.50%
500-549
5.00%
28.40%
Less than 499
2.00%
41.00%
According to this chart, investors should use corresponding vacancy+tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.
To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.
Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.
We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.
We're over in Metro Detroit - where you can still find cashflowing Class B rentals in the Ring Cities:)Thanks for sharing that insight. It's very helpful.
- Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes1y
Hey Mark,
I spent some early childhood years in Ada, and my Dad grew up in Grand Rapids, so I’m familiar with the area. It’s definitely gotten hot lately, and I get what you mean about the prices in SW Michigan being a bit steep for cash flow.
If you’re serious about investing, I’d recommend taking a hard look at Detroit.
It’s not too far from SW Michigan, so you’d still be close to the market, but property prices there are far more affordable.
Detroit offers strong cash flow potential, especially if you’re strategic about where you invest. The market has its challenges, but with the right approach, it can make a lot of sense long term.
I've been investing in Detroit for 6 years and have built up a 12-door portfolio here, mostly using the BRRRR strategy. If you're interested, I have plenty of resources I'd be happy to share on the market, strategies, and what to expect when investing there.
Best,
Travis
- Ionia, MI · Member since 2025 · 5 posts · 1 vote1y
Quote from @Travis Biziorek:
Hey Mark,
I spent some early childhood years in Ada, and my Dad grew up in Grand Rapids, so I’m familiar with the area. It’s definitely gotten hot lately, and I get what you mean about the prices in SW Michigan being a bit steep for cash flow.
If you’re serious about investing, I’d recommend taking a hard look at Detroit.
It’s not too far from SW Michigan, so you’d still be close to the market, but property prices there are far more affordable.
Detroit offers strong cash flow potential, especially if you’re strategic about where you invest. The market has its challenges, but with the right approach, it can make a lot of sense long term.
I've been investing in Detroit for 6 years and have built up a 12-door portfolio here, mostly using the BRRRR strategy. If you're interested, I have plenty of resources I'd be happy to share on the market, strategies, and what to expect when investing there.
Best,
Travis
We have been looking loosely at Detroit but a lot of the neighborhoods around there scare me, lots of run down homes selling for pennies on the dollar. Do you think Detroit would be a good area for house flipping? We have also been heavily looking at surrounding areas, ie Troy, Rochester, W Bloomfield, etc
- 1yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votesCrappy homes will attract crappy tenants. Period. And a crappy neighborhood will attract crappy tenants...even if you sink a bunch of money into a house to fix it up.
Quote from @Sarah Steinhaus:
Quote from @Travis Biziorek:
Hey Mark,
I spent some early childhood years in Ada, and my Dad grew up in Grand Rapids, so I’m familiar with the area. It’s definitely gotten hot lately, and I get what you mean about the prices in SW Michigan being a bit steep for cash flow.
If you’re serious about investing, I’d recommend taking a hard look at Detroit.
It’s not too far from SW Michigan, so you’d still be close to the market, but property prices there are far more affordable.
Detroit offers strong cash flow potential, especially if you’re strategic about where you invest. The market has its challenges, but with the right approach, it can make a lot of sense long term.
I've been investing in Detroit for 6 years and have built up a 12-door portfolio here, mostly using the BRRRR strategy. If you're interested, I have plenty of resources I'd be happy to share on the market, strategies, and what to expect when investing there.
Best,
Travis
We have been looking loosely at Detroit but a lot of the neighborhoods around there scare me, lots of run down homes selling for pennies on the dollar. Do you think Detroit would be a good area for house flipping? We have also been heavily looking at surrounding areas, ie Troy, Rochester, W Bloomfield, etc
Now, no one would say that you can't make money in a crappy part of town...just be aware and be expecting problems...big ones and constantly.
- 1yRobert RogalskiPro MemberRental Property Investor · Kalamazoo, MI · Member since 2021 · 7 posts · 5 votes
Prices in SW Michigan are definitely high for what you get (like the majority of the country at the moment) but as mentioned before, cashflow opportunities still exist with these high price and high interest rates; just no where what they used to be.
I have 2 properties in Kalamazoo area that cashflow nicely but are C-class and come with the headaches and maintenance surprises that you typically find in this caliber of property.
My two cents is BRRRR if you can find the right property (even the ones needing heavy renovation seems to be overpriced however) OR house hack a multi family to start off if your life style allows it. There's plenty of 2-4 unit properties in Kzoo that could lead to very lucrative house hacking opportunities by renovating unit by unit while getting most your mortgage covered. If I could start all over as a younger investor in the area, that's the route I'd go. - Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes1y
The best time to plant a tree was 20 years ago. The second best time is now.
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes1y
Is now a good time to start? Now is the only time to start....
Were there better times to get started? Of course....the folks that started in 2009 are all retired. Those of us that got a later start are not quite retired....
Anytime I look back on my career I remember thinking "gosh the market is tough right now" and looking back I wish I could go back to those days where I was saying that. The more I move in my investing career the more I realize timing is not possible. You just have to get in and stay in for the long haul.
If you wait, you will wish you hadn't.
- 1ySeth McGatheyBusiness MemberReal Estate Agent · Milwaukee WI · Member since 2024 · 318 posts · 251 votes
Two rules I try to live by as an investor.
1. Any property that breaks even or cash flows today is a great investment 10 years from now. So it is always the right time to buy.
2. If you can BRRRR successfully then do it. The only time not to BRRRR is if you are not trying to build a portfolio right now. Most other strategies are either going to force you to wait until you save up again or provide you some other benefit besides long term profits. (For example a straight flip won't get you longterm wealth but will get you quick cash for a future deal).
Seth McGathey - Shorewest Realtor4.913 Reviews - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes1y
Well said @Seth McGathey.
@Mark Morosky you are NOT buying your first investment property for cash flow. You are buying it to have one. Learn from it and let it do its thing for a decade or two. You don't need to make all your money on your first one, but you want to be low risk, which means quality building in a good location. If you make a little cash flow, leave it in the biz.
Real estate is about equity, cash flow is just to cover your expenses while you grow a portfolio. If you want cash flow, buy a business. That is literally designed for cash flow.
Friends who don't understand REI will ask you: you spent all that money and worked your butt off for 6 months nights and weekends for $200 in cash flow?? They are right, and that's why I am telling you cash flow can't be the reason.
- Member since 2025 · 7 posts · 6 votes1y
I appreciate that insight, very well put.
- 1yKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
Finding cash-flowing properties in Southwest Michigan is getting tougher, especially with rising renovation costs. If you're working with limited funds, the BRRRR strategy can help you stretch your money and build equity, as long as you can find properties with good potential value and manage renovations effectively. In this market, the best deals are usually off-market or distressed properties, since most listed ones don't make financial sense. If that feels too challenging, a safer option might be to start with cheaper properties that need only minor fixes. You can then refinance or sell them after 6–12 months for your first successful deal.
Kerlous Tadres | Reafco Real Estate539 Reviews - 1yWendy PattonBusiness MemberReal Estate Consultant · Clarkston, MI · Member since 2009 · 859 posts · 349 votes
@Sarah Steinhaus there are many great places in the city of Detroit to invest, however, you are right that there are some that aren't so great. If you are planning to invest in the city, you will want to work with someone locally who won't steer you wrong. There are some scammers (like anywhere) that are over selling properties in the city. If I can ever help you, please reach out. I don't work with buyers myself but i do run the MREI and know many who are reputable.
Michigan Real Estate Investors533 Reviews
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