Class C Property Management Companies

10 Replies

I’m searching for a couple investment properties to purchase that already have tenants in place. I can afford to purchase 2-3 class B properties or 4-6 class C properties.

I would prefer to purchase a larger volume of properties with class C, but I’ve spoken to multiple property management companies and they all say they only manage class or B.

Am I not speaking to enough property management companies or do hardly any of them manage class C properties?

Would love a recommendation for Indy or KC if possible.

I think it has to do with the cost of management.  If you are paying 10% to a PM, that 10% is much less for a C class property than it is for something commanding a higher rent, yet the phone call (or whatever needs human capital) from the C tenant takes a much time to resolve as the B tenant.

Some hairy-chested PMs however, specialize in that niche (like @Jeff Schechter does apparently).  If you can find a good one, great.  Although I think you are limiting your choices of PMs in the market if you want them to manage C's.  Most of the people I know of that own C class properties self-manage for that reason.

@Jeremy Helsabeck I will PM you with my PM's contact and some feedback. My Indy properties are all C class. I'm running out right now and just saw this so if I don't get back to you by tomorrow, feel free to remind me.

We do majority C class in metropolitan Indianapolis. Just be careful as C can mean different things to different people. Our areas can change fast here street to street. I’d recommend talking with a PM prior to buying to get their opinion on the area.

Good luck!

@Jeremy Helsabeck You seem set on going the C class route. I’d buy 3 B class properties over 6 C class properties any day of the week.

Especially if you are outsourcing management. Your paper numbers probably look better on the C class properties, but over time the B class properties real life numbers will more closely mirror the paper ones. There are things that can derail a C class buy and hold property that are so out of the norm you won’t think it is possible until it happens. Those things crush cash flow on these types of properties.

@Jeremy Helsabeck ....just as @Josh C. said, neighborhoods in Indy vary street to street especially in the main part of the city. The outer suburbs are a bit more stable and generally B class but even there, there are some bad pockets such as Mars Hill or Northeastwood. If you are serious about investing in Indy, you really owe it to yourself to spend a few days there and get to know the areas. Find an REA that you want to work with and get him or her to show you around and, of course, discuss with a PM.