My Case for C and D Properties!

Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes

I know not everyone is against C and D properties but I have a few cases for them as a viable asset to invest in.

1. Cheaper price point to get started in real estate (cheaper is not as worse)

2. It is less affected by down economies and recessions ( the lower middle class to lower class usually work in jobs that don't fail during hard times).

3. When these people feel comfortable where they are, they are less likely to want to move ( they do not like change as much as other classes).

4. People in these communities want the same things that people in other communities want safe, affordable, and nice living space.

( If you can provide that slightly or a lot better than other people in the community than you can have an endless supply of tenants).

5. You can make a great change in particular areas of a city, state, or town and uplift the community for good while making money. (Double whammy)

What are your thoughts?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

while those are generally good thoughts.. reality is far different in my experience owning hundreds of them.

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Bob Daniels
Phoenix, AZ · Member since 2017 · 135 posts · 294 votes
6y
Personal opinion, but low quality homes are a job, not an investment.
Low end housing will likely not appreciate in value in any significant way. What you have is 200/month in cashflow, and you will likely have 200/month next year, and the year after that, and the year after that. The problem is that 200/month isn't going to change anyones lives. For the amount of time and effort that it takes to learn about real estate and how to be a landlord there are much easier and safer ways to earn 200 bucks. Go drive for Uber 1 weekend/month with no risk whatsoever. In order for low income housing to work, you have to rapidly scale to dozens, or hundreds of units. However these units are time intensive to manage, and thus quickly turns into a job.
While this job may not require 40/hrs a week like your old job did, it is in fact still a job. And probably a significantly more stressful job than your last one since this one has a financial risk to it. Often times property management companies aren't thrilled with dealing with these properties, and will either charge a significant amount to make it worth their time, or simply won't work with you to begin with.
That's not to say that C/D properties are bad, some people love them and make good money from them. But realize that it is, and will always be work to keep them producing income properly. Personally I prefer B+ neighborhoods. While the initial cashflow is lower, they are relatively stress free properties that have predictable annual rent increases. Due to these rent increases, my properties quickly cashflow much more than a meager 200/month all while experiencing dramatic increases in value.
Lets assume a hypothetical scenario where you purchase two similar homes. Both homes rent for 1k/month. The difference is that the first home is in a cheaper neighborhood, and it's total monthly expenses (mortgage, insurance, repairs, vacancy etc) is 800/month and thus cashflows 200/month. The second home is slightly more expensive, and due to it's higher mortgage payments, its monthly expenses are at 1k/month and is therefor cashflow neutral. However the first home is in a stagnant area, that does not have any annual increase in its rents, while the second home increases by an average of a modest 3% per year.
If you assume this 200/month with little or no increase in appreciation or rent prices, then in a 15 year span the first home will theoretically cashflow 36,000 total, at a rate of 2,400 per year, or 200/month.
However the second home in a better neighborhood,may start off cashflow neutral, but after 1 year of rent increases will be 1,030/month and will cashflow 30 bucks. Over the 15 year period this home actually cashflows more, at 43,185 total cashflow, and is cashflow positive by 512/month by year 15. If you expand this thought experiment past the 15 year mark, this home starts to obliterate the other home in terms of returns
However the real magic lies in the fact that the home in the second scenario has also appreciated by roughly 51%, and also likely required less money to be spent on repairs, and caused significantly less stress in management.
The age old mantra in real estate is location, location, location. If you have the right location, the cashflow will come...it just takes a little time.  People complain that areas such as San Francisco don't cashflow, however according to RentJungle.com, the average rent for a 2 bed in 2011 was 2611/month, while the same apt would rent for 4,690 today. That's a 2,080/month increase in the last 8 years and would be cashflowing VERY nicely.
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Account Closed
Member since 2018 · 214 posts · 175 votes
6y
My class C tenants didn’t cause me any trouble because we did very good screening . However. The turn over vacancy time is longer compare to Class A/B area, because I can find average of only one good tenant out of 30 applicants, the other 29 applicants do not meet our strict rental requirements.
In contrast, we can find 5 good applicants easily out of 10 applicants, which means the vacancy time is much shorter, and make us more profit.
1 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Bob Daniels:
Personal opinion, but low quality homes are a job, not an investment.
Low end housing will likely not appreciate in value in any significant way. What you have is 200/month in cashflow, and you will likely have 200/month next year, and the year after that, and the year after that. The problem is that 200/month isn't going to change anyones lives. For the amount of time and effort that it takes to learn about real estate and how to be a landlord there are much easier and safer ways to earn 200 bucks. Go drive for Uber 1 weekend/month with no risk whatsoever. In order for low income housing to work, you have to rapidly scale to dozens, or hundreds of units. However these units are time intensive to manage, and thus quickly turns into a job.
While this job may not require 40/hrs a week like your old job did, it is in fact still a job. And probably a significantly more stressful job than your last one since this one has a financial risk to it. Often times property management companies aren't thrilled with dealing with these properties, and will either charge a significant amount to make it worth their time, or simply won't work with you to begin with.
That's not to say that C/D properties are bad, some people love them and make good money from them. But realize that it is, and will always be work to keep them producing income properly. Personally I prefer B+ neighborhoods. While the initial cashflow is lower, they are relatively stress free properties that have predictable annual rent increases. Due to these rent increases, my properties quickly cashflow much more than a meager 200/month all while experiencing dramatic increases in value.
Lets assume a hypothetical scenario where you purchase two similar homes. Both homes rent for 1k/month. The difference is that the first home is in a cheaper neighborhood, and it's total monthly expenses (mortgage, insurance, repairs, vacancy etc) is 800/month and thus cashflows 200/month. The second home is slightly more expensive, and due to it's higher mortgage payments, its monthly expenses are at 1k/month and is therefor cashflow neutral. However the first home is in a stagnant area, that does not have any annual increase in its rents, while the second home increases by an average of a modest 3% per year.
If you assume this 200/month with little or no increase in appreciation or rent prices, then in a 15 year span the first home will theoretically cashflow 36,000 total, at a rate of 2,400 per year, or 200/month.
However the second home in a better neighborhood,may start off cashflow neutral, but after 1 year of rent increases will be 1,030/month and will cashflow 30 bucks. Over the 15 year period this home actually cashflows more, at 43,185 total cashflow, and is cashflow positive by 512/month by year 15. If you expand this thought experiment past the 15 year mark, this home starts to obliterate the other home in terms of returns
However the real magic lies in the fact that the home in the second scenario has also appreciated by roughly 51%, and also likely required less money to be spent on repairs, and caused significantly less stress in management.
The age old mantra in real estate is location, location, location. If you have the right location, the cashflow will come...it just takes a little time.  People complain that areas such as San Francisco don't cashflow, however according to RentJungle.com, the average rent for a 2 bed in 2011 was 2611/month, while the same apt would rent for 4,690 today. That's a 2,080/month increase in the last 8 years and would be cashflowing VERY nicely.
As I been saying it isn't everyone's cup of tea and you can cashflow more than 200 especially if you buy right not to mention appreciation can also be gained by doing nice upgrades ( not extravigent)
I have done a real life deal that cash flows more than 200 per month and my all is price was less than 50 and it appraised for more than the purchase price and rehab costs. Also the same tenant has been there going on 2 years in a few months and the other tenant is going on a year and is going to renew her lease in 3 months and neither one of them damage the property and no major mechinal issues. ( It is a multi family unit) Now with that being said it was not easy by any means to get to this point but can be done.

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Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
@Quentin Mitchell

Quentin, you write: "Every class of properties comes with its challenges just pick the one that best aligns with your skill set." The implication is that all skills sets and all challenges are equal. I sincerely doubt many B-class multifamily investors who starts out with, say, $500K to invest, have ever worried about getting shot, as I have, multiple times. I likewise doubt that many have ever dealt with a tenant showing up drunk and armed at their home in the middle of the night to "negotiate" a new rental agreement.

@Joseph R. Smith

To clarify my statement that my business model will not scale, as I say in my profile, I am certain I cannot get beyond 25 properties without leaving me with zero time to do acquisitions and rehabs because all my time is invested in existing property maintenance and upkeep. If you can find a way to profitably own and operate 100, 200, 300 or more 60-100-year-old C-class SFR in a city like Pittsburgh, self-managed, third-party-managed, in-house-managed, whatever, more power to you.

3 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Account Closed:
My class C tenants didn’t cause me any trouble because we did very good screening . However. The turn over vacancy time is longer compare to Class A/B area, because I can find average of only one good tenant out of 30 applicants, the other 29 applicants do not meet our strict rental requirements.
In contrast, we can find 5 good applicants easily out of 10 applicants, which means the vacancy time is much shorter, and make us more profit.
I cannot argue with that fact that it is harder to find tenants in this property class that is where the majority of the work is or should be but if that is done right then the rest of the process is a lot easier.
In any class of properties work has to be done, as investor isn't never going to be sipping pina colda's all the time.

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Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Jim K.:
@Quentin Mitchell

Quentin, you write: "Every class of properties comes with its challenges just pick the one that best aligns with your skill set." The implication is that all skills sets and all challenges are equal. I sincerely doubt many B-class multifamily investors who starts out with, say, $500K to invest, have ever worried about getting shot, as I have, multiple times. I likewise doubt that many have ever dealt with a tenant showing up drunk and armed at their home in the middle of the night to "negotiate" a new rental agreement.

@Joseph R. Smith

To clarify my statement that my business model will not scale, as I say in my profile, I am certain I cannot get beyond 25 properties without leaving me with zero time to do acquisitions and rehabs because all my time is invested in existing property maintenance and upkeep. If you can find a way to profitably own and operate 100, 200, 300 or more 60-100-year-old C-class SFR in a city like Pittsburgh, self-managed, third-party-managed, in-house-managed, whatever, more power to you.

My investments are in Detroit, I can not speak on your market because I do not know enough about it. but as far as tenants being armed and drunk that's all in the screening you can give people a series of test to see how they handle business before they even get to the point of becoming a tenant and I mean easy stuff like texting you at a certain time, call me tomorrow at this time send me an email, and have conversations with them to find out their stories and then make a educated guess as to if they are a fit or not and not be in hurry to fill the property cause they have the money ( not saying you do or don't , just speaking in general)
Also most class C's you shouldn't be worried about getting shot those sound more like war zones, which is an entirely different class.
Oh, and do the major rehab work in the beginning if you can like new furnaces, hot water tanks, etc.

2 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Jim K.:
@Quentin Mitchell

Quentin, you write: "Every class of properties comes with its challenges just pick the one that best aligns with your skill set." The implication is that all skills sets and all challenges are equal. I sincerely doubt many B-class multifamily investors who starts out with, say, $500K to invest, have ever worried about getting shot, as I have, multiple times. I likewise doubt that many have ever dealt with a tenant showing up drunk and armed at their home in the middle of the night to "negotiate" a new rental agreement.

@Joseph R. Smith

To clarify my statement that my business model will not scale, as I say in my profile, I am certain I cannot get beyond 25 properties without leaving me with zero time to do acquisitions and rehabs because all my time is invested in existing property maintenance and upkeep. If you can find a way to profitably own and operate 100, 200, 300 or more 60-100-year-old C-class SFR in a city like Pittsburgh, self-managed, third-party-managed, in-house-managed, whatever, more power to you.

@Jim K. I wish nothing but luck to though!
0 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
Originally posted by @Quentin Mitchell:

I hear all the horror stories and like I stated before it isn't for everyone but those things you stated in the above post I have not dealt with it has a lot to do with screening tenants and setting the expectations from day 1. Also some mentioned in the thread that you got to be geniue and the tenants cannot think that you're just doing this for a quick buck. The more people you help the more successful you become I truly believe that.
Also look into government programs and partner with them to provide housing for that population they have more incentive to comply and be on the straight and narrow so that they don't loose their assistence.
Every class of properties comes with it's challenges just pick the one that best aligns with your skill set.

I have found that my low-income tenants understand that I am doing this to make money and have reasonable expectations. Most of the time they tell me landlording is something they also ASPIRE to. They have been blamed and charged for "breaking" old stuff that was on it's last leg anyway and are actually surprised if you do the right thing or make an effort to be fair.

Many of the most annoying problems with D properties are related to the neighborhood not the tenants. At my properties in the worst neighborhood, I had 6 trash cans stolen in one year-- probably by the homeless in the tent city down the street for collecting recycling. I have had teenagers run down the corrider between my buildings breaking windows. We had a drunk driver take out three tenants cars parked legally on the street. There was also a rash of vandalism where people scratched obsenities on cars up and down the street. We have found used condoms in the alley behind the old carraige houses before the city tore them down and then on the friggin' front porch (f'ing meth heads). Old tv's and mattress abandoned next to the dumpster. And don't get me started about the litter.

I accept late payments on a regular basis at no charge with proper notification. I do charge without notification. Not one single tenant has left owing me money (except the guy that OD'd and I returned his deposit for a fund for his kid). Even the tenant I asked to leave for allowing the selling of drugs cleaned the stove and fridge before she left. One other guy went to jail but he wrote me a statement giving me back the apartment before he turned himself in. I did have to have his place cleaned since he "left in a hurry." But his family came and packed up his stuff and I stored it in the basement until he got out. I have honest, hard working tenants that want to pay their rent and want a decent place to live, with reasonable maintenance and an honest landlord-- they want good value for their hard earned money. Everybody has issues but I admire the optimism of my tenants that are or have been in some very difficult situations. You have to have a heart but don't let anyone get a behind by more than one month's rent. They should be offering to pay something on the due date...and have a plan for paying the rest. Usually I try to have people stay current with the daily rent. People that know they can't make it will usually move and let you know their plan if you've been reasonable and decent. I'm not selling these because we just finished renovating them and they make good money. I have only had one vacancy in the last 24 months (the drug dealers) and her apartment was re-rented before she had all her furniture out. But I'm also not buying anymore in that neighborhood.

7 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Tom Shallcross
And there it is, a $75k home cash flowing at 2x doesn’t even come close to the same wealth generation. So, are you trying to build wealth or trying to create cashflow.
You can eat cashflow, and if/when you do your “wealth” goes straight to the toilet. Cashflow $5k monthly and spend $5k monthly and you’re in exactly the same position in 20 years except you MIGHT be left with an expense to plow over and a small asset of land. And for a legitimate D class property that 20 year timeline shrinks to 10 in a lot of cases... or even less
1 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Jill F.:
Originally posted by @Quentin Mitchell:

I hear all the horror stories and like I stated before it isn't for everyone but those things you stated in the above post I have not dealt with it has a lot to do with screening tenants and setting the expectations from day 1. Also some mentioned in the thread that you got to be geniue and the tenants cannot think that you're just doing this for a quick buck. The more people you help the more successful you become I truly believe that.
Also look into government programs and partner with them to provide housing for that population they have more incentive to comply and be on the straight and narrow so that they don't loose their assistence.
Every class of properties comes with it's challenges just pick the one that best aligns with your skill set.

I have found that my low-income tenants understand that I am doing this to make money and have reasonable expectations. Most of the time they tell me landlording is something they also ASPIRE to. They have been blamed and charged for "breaking" old stuff that was on it's last leg anyway and are actually surprised if you do the right thing or make an effort to be fair.

Many of the most annoying problems with D properties are related to the neighborhood not the tenants. At my properties in the worst neighborhood, I had 6 trash cans stolen in one year-- probably by the homeless in the tent city down the street for collecting recycling. I have had teenagers run down the corrider between my buildings breaking windows. We had a drunk driver take out three tenants cars parked legally on the street. There was also a rash of vandalism where people scratched obsenities on cars up and down the street. We have found used condoms in the alley behind the old carraige houses before the city tore them down and then on the friggin' front porch (f'ing meth heads). Old tv's and mattress abandoned next to the dumpster. And don't get me started about the litter.

I accept late payments on a regular basis at no charge with proper notification. I do charge without notification. Not one single tenant has left owing me money (except the guy that OD'd and I returned his deposit for a fund for his kid). Even the tenant I asked to leave for allowing the selling of drugs cleaned the stove and fridge before she left. One other guy went to jail but he wrote me a statement giving me back the apartment before he turned himself in. I did have to have his place cleaned since he "left in a hurry." But his family came and packed up his stuff and I stored it in the basement until he got out. I have honest, hard working tenants that want to pay their rent and want a decent place to live, with reasonable maintenance and an honest landlord-- they want good value for their hard earned money. Everybody has issues but I admire the optimism of my tenants that are or have been in some very difficult situations. You have to have a heart but don't let anyone get a behind by more than one month's rent. They should be offering to pay something on the due date...and have a plan for paying the rest. Usually I try to have people stay current with the daily rent. People that know they can't make it will usually move and let you know their plan if you've been reasonable and decent. I'm not selling these because we just finished renovating them and they make good money. I have only had one vacancy in the last 24 months (the drug dealers) and her apartment was re-rented before she had all her furniture out. But I'm also not buying anymore in that neighborhood.

That is awesome keep up the good work and luckily so far haven't had to deal with those issues so maybe my properties are C+ lol.

2 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Account Closed:
@Tom Shallcross
And there it is, a $75k home cash flowing at 2x doesn’t even come close to the same wealth generation. So, are you trying to build wealth or trying to create cashflow.
You can eat cashflow, and if/when you do your “wealth” goes straight to the toilet. Cashflow $5k monthly and spend $5k monthly and you’re in exactly the same position in 20 years except you MIGHT be left with an expense to plow over and a small asset of land. And for a legitimate D class property that 20 year timeline shrinks to 10 in a lot of cases... or even less
I am not sure how you can cashflow 5k and spend 5k that isn't possible mathmatically and you can create wealth from the cash flow, you can pay the house off faster or not have a mortgage at all and everything appreciates over time even class C and D maybe not as much but defintely some, (thanks inflation). and in my opinon buying for appreciation is risky because there are a ton of variables out of your control and if the strategy is for appreciation and that doesn't happen then you're sol my friend but again I am not trying to convince anyone that this is the best plan or option I am simply saying it can be done and is possible with this property class.

0 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
@Thomas Sherlock Check out this thread
1 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Quentin Mitchell
What I meant is, group a few doZen of them together that over a 5 year hold will cashflow $100 each monthly (round to $5,000) and then yes, you could use that to “live on”... but at the end of year 10 you’re left with an absolute garbage sfh that literally has zero value (physical buildings DEppreciate) and you’ve got some land value (land Appreciates)... so you may have paid $75k for both land and sfh to start, you ended up literally eating and paying for gas etc with all your “cashflow” and now in year 10 (or sooner for D class) you’ve got a knockdown little box, in the hood, beside 400 other little knockdown boxes...
Whereas buying in a B neighbourhood, the useful lifetime of the home if managed well will be (at minimum for a comparable asset) quadruple and you’re building genuine wealth instead of living paycheck to paycheck on monthly ”cashflow” from the hood rats.
You will never build genuine generational wealth on cashflow. You might live on it just fine, but that isn’t wealth any more than your day job paycheck is. By the time you’ve got our D class fully paid off it has nearly $0 value. Stuffing your kids stockings with the title to a $0 house likely isn’t your target
4 Reply
Bob Daniels
Phoenix, AZ · Member since 2017 · 135 posts · 294 votes
6y
@Quentin Mitchell I believe he is talking about living expenses. If you cashflow 5k/month from your rental properties, but your day to day living expenses total 5k/month (gas, food, clothing etc), then you are net neutral. Years later you what you are left with is a bunch of beat up homes that are difficult to liquidate, and if you do sell them you now owe all that depreciation recapture.
There was a thread just the other day about an investor who was stuck after numerous years with a bunch of low end units that he couldn't get rid of without taking a loss.
4 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Bob Daniels
Nailed it Bob. I’m outsourcing writing to you next time.
0 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Account Closed:
@Quentin Mitchell
What I meant is, group a few doZen of them together that over a 5 year hold will cashflow $100 each monthly (round to $5,000) and then yes, you could use that to “live on”... but at the end of year 10 you’re left with an absolute garbage sfh that literally has zero value (physical buildings DEppreciate) and you’ve got some land value (land Appreciates)... so you may have paid $75k for both land and sfh to start, you ended up literally eating and paying for gas etc with all your “cashflow” and now in year 10 (or sooner for D class) you’ve got a knockdown little box, in the hood, beside 400 other little knockdown boxes...
Whereas buying in a B neighbourhood, the useful lifetime of the home if managed well will be (at minimum for a comparable asset) quadruple and you’re building genuine wealth instead of living paycheck to paycheck on monthly ”cashflow” from the hood rats.
You will never build genuine generational wealth on cashflow. You might live on it just fine, but that isn’t wealth any more than your day job paycheck is. By the time you’ve got our D class fully paid off it has nearly $0 value. Stuffing your kids stockings with the title to a $0 house likely isn’t your target

You're saying D I said C or D mainly C and I disagree that it will depreciate because one thing you're not taking into account is those D and C can become trendy areas and see appreciation is that 1000% but the long game of banking on appreciation to be is very risky but there are ton of factors that go into and most are out of your control. Now with that being said I am not opposed to B at all just saying C and D is an easier price point and experience booster to get someone started in real estate.
I also believe B's are good as well the post isn't to say one is better than another.

2 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Bob Daniels:
@Quentin Mitchell I believe he is talking about living expenses. If you cashflow 5k/month from your rental properties, but your day to day living expenses total 5k/month (gas, food, clothing etc), then you are net neutral. Years later you what you are left with is a bunch of beat up homes that are difficult to liquidate, and if you do sell them you now owe all that depreciation recapture.
There was a thread just the other day about an investor who was stuck after numerous years with a bunch of low end units that he couldn't get rid of without taking a loss.

I get it but that was his example of cashflow more can be made from Class C as well is all I'm saying there are so many different strategies and ways to scale in this business and some people are better in area's than others so my point was for someone that may be needed to hear that this could be a possible option if they have the skill and are in a market where the numbers work in their favor.
Like I also mentioned before you never know where gentrification can happen but that is luck and in my opinion, any appreciation on SFH or small Multi-families is going to have a lucky component because of too many variables outside of your control. Now commercial can be a little more manipulated and then class B's are the clear better asset but again C is not bad either D is the least perferable I will definitely give you that.

0 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
@Quentin Mitchell
I must’ve missed the mainly C part in a previous post. A genuine D class property will not have the building itself appreciate. The land maybe (or maybe not as you have identified), but not the building. You’re looking at a 50+ year old structure that’s already had deadbeats living in it for a couple decades at minimum and will be at least another decade (likely more) before the area is anything above a D. The same way as termites destroy a structure, so do hood rats. D class does not transition to B or higher in a 5 year window. Now, if you’re talking an already transitioning area (not D), maybe. Again, maybe not as you’ve identified. Further down the continuum you travel the more common tax depreciation techniques become accurate and eventually not even enough. Up here I’m allowed 4%/ year on a declining basis. D class tenants often do way more damage than 4% of asset value in a year. 4% can be a regular paycheck Friday for them.
2 Reply
Account Closed
Member since 2019 · 1k+ posts · 1k+ votes
6y
...If you follow your market closely, you know exactly where gentrification will happen. Timelines can be affected by local policy makers as can areas so its never a “set it and forget it” type plan, continue to monitor closely.
0 Reply
Quentin Mitchell
OP
Investor · Chicago, IL · Member since 2016 · 197 posts · 105 votes
6y
Originally posted by @Account Closed:
...If you follow your market closely, you know exactly where gentrification will happen. Timelines can be affected by local policy makers as can areas so its never a “set it and forget it” type plan, continue to monitor closely.
Agreed

0 Reply
Kai Van Leuven
Investor · USA · Member since 2015 · 325 posts · 447 votes
6y
@Jim K.
Dude your posts are 100% right on. People think they will sit back and do nothing. That it will all come to them because they are smarter than the next guy. There are no GURU secrets! It is hard work, really hard work. There is not enough “meat on the bone” to be paying other people (property managers, handyman, accountants, lawyers, ect.).
All my stuff is B/C. I will tell you, the C stuff is way harder to manage. At one point I managed D and F stuff. It was horrific. I would never go back.
Also the lower than replacement cost stuff makes no sense. The cash flow has to be so much higher to offset an asset that is losing money against inflation.
4 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Account Closed:
...If you follow your market closely, you know exactly where gentrification will happen. Timelines can be affected by local policy makers as can areas so its never a “set it and forget it” type plan, continue to monitor closely.

Kris, I would say that is not entirely accurate. Yes, you can make good, broad, armchair predictions. But a lot of been money has been lost in the 'Burgh by people trying to read the property-speculation tea leaves and betting on this or that street within this or that block. If you live here and are in the business and haven't heard the phrase "the next Lawrenceville," you're not really in the business. Lawrenceville is a City neighborhood that gentrified nicely and we're still waiting for the rain elsewhere, and are perennially assured that yes, yes, yes it will come. If you google the phrase you can easily see what I'm talking about.

Your profile doesn't mention where you're from and if the population is increasing or decreasing. While population centers with decreasing population like mine also have areas that gentrify as cities change, predicting that gentrification years before it happens with real accuracy is often a fool's errand.
One reason why specific predictions get upended has to do with shootings, often tragically random ones. I am reminded of this because we just had one last month a block from one of our properties. 27 years old, prep cook at a Brazilian steakhouse, got off the bus at 10:30 pm to walk home, got shot in a back ally. Died on the way to the hospital.
0 Reply
Tyrell Perry
Rental Property Investor · Cleveland, OH · Member since 2016 · 69 posts · 108 votes
6y

@Jim K. "The ghetto will beat your illusions out of you"...funny but true. The jab jab uppercut combo can be brutal. As Mike Tyson said, "everyone has a plan until they get punched in the face."
5 Reply
Robert Collins
Rental Property Investor · Greenville County SC / Atlanta, GA · Member since 2017 · 403 posts · 120 votes
6y
@Quentin Mitchell
Thanks! That helped a lot
0 Reply
Brent Crosby
Rental Property Investor · Farmington, UT · Member since 2018 · 171 posts · 148 votes
6y
@Quentin Mitchell not sure I buy #2. Lots of these types of tenants work in the construction industry in my area. During the last recession many were out of work for quite some time.
1 Reply

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