Finding the right property for the right tenant

1 Reply

Hello All!

I am still looking for my first rental and one thing keeps bothering me.

I'd like to rent to A-class tenants who would pay a premium for a better property (granite counter tops, hardwood floors, etc.). I may settle for B+ but I would not go any lower.

For this type of tenant I need an A-B+ class property but these properties are overpriced and the rents for them are not high enough to produce good cashflow.

If I move to B-,C territory, I can buy some cheap properties but they would still be cheap after rehab and attract only low quality tenants.

So, my requirements contradict each other. How do I solve it? Do low price but high quality properties that can attract a high quality tenant exist?

Thanks
Nick

@Nick B.  This is how I see it

A Property/neighborhood = Enough rent to cover expenses but very little cash flow.  Property value will have good increases and you would gain equity by appreciation

B Property/neighborhood = Decent cash flow at or slightly above the 1% rule and moderate appreciation over time

C Property/neighborhood = Good cash flow close to the 2% rule - except to sell the property for what you paid for it.  

Personally, I go for the granite / SS / Condo quality in the B neighborhoods 

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