Doubting my C class rentals

Member since 2019 · 295 posts · 159 votes

I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

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Andrew Watson

Rental Property Investor · Atlanta, GA · Member since 2015 · 36 posts · 44 votes

We’re 100% committed to affordable housing...which is mostly C class properties. We buy SFHs and we are all-in at roughy $32K. We renovate the homes to make them the nicest available for the price, and rent for $725-$750. Choose your residents carefully, take good care of them, and the numbers are hard to beat.

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Jermell Shavers
OP
Member since 2019 · 295 posts · 159 votes
6y
@Joe P. I’d probably say greener grass syndrome for sure.
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Jermell Shavers
OP
Member since 2019 · 295 posts · 159 votes
6y
@Jim K. She basically told me as long as the house is here she will be here which is great. I chuckled to myself in the car after that. She asked me if she could sign a five year lease while I like that but let’s take it one year at a time
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Stephen Watson
Rental Property Investor · Phoenixville, PA · Member since 2020 · 2 posts · 2 votes
6y
@Jermell Shavers I understand where you are coming from with the credit issue. It seems that you have access to cash so you may want to invest in credit repair. That can help you get to the score you need and get the negative items removed from your credit. In addition although it may be a higher interest rate but a hard money lender may be able to help you as well.
1 Reply
Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
6y
Originally posted by @Jermell Shavers:
@Jim K. She basically told me as long as the house is here she will be here which is great. I chuckled to myself in the car after that. She asked me if she could sign a five year lease while I like that but let’s take it one year at a time

No, no, Jermell, trust me on this one. MONTH-TO-MONTH in C-CLASS. I once signed a 2 year lease and six months in, my tenant's daughter got knocked up, the tenant moved in her own boyfriend, then she moved in her daughter's boyfriend, and along with the daughter's boyfriend's came the daughter's boyfriend's pit bull.
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Jim Spatzenfeld
Investor · NorCal · Member since 2015 · 281 posts · 240 votes
6y
Originally posted by @Jermell Shavers:
@Jim K. She basically told me as long as the house is here she will be here which is great. I chuckled to myself in the car after that. She asked me if she could sign a five year lease while I like that but let’s take it one year at a time

A lease for more than 1 year is just a disadvantage for the Landlord because the tenant can break a lease at anytime, and if you sue in court the most you’ll get is 1 month rent since it’s your responsibility to market the house for a new tenant asap. A 5 year lease would only lock in the Landlord, but not the tenant. Good for tenant, bad deal for Landlord.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Jill F.:
Right now with all this uncertainty, I wish I was sitting on paid for properties.
I have always said the best way to buy low end or really the safest way is with cash and no debt.. true cash flow.. bad times you ride through no issues.. and once you have a few you stack enough cash to go buy another and keep rolling those up for 20 years your going to be so far ahead of the max debt minimum cash into the deal investor.. I know its not popular on BP but its the long game and the most profitable over time and by far the least risk

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Ross Bowman
Investor · Charleston, SC · Member since 2019 · 112 posts · 126 votes
6y
Originally posted by @Andrew Watson:
We’re 100% committed to affordable housing...which is mostly C class properties. We buy SFHs and we are all-in at roughy $32K. We renovate the homes to make them the nicest available for the price, and rent for $725-$750. Choose your residents carefully, take good care of them, and the numbers are hard to beat.
Hey Andrew, when you say "all in at roughly 32k" do you mean down payment and closing/repairs?

Or do you mean you are purchasing these all cash for around 32k and renting at $750? Sorry if that's a dumb question, just wanting to clarify.

2 Reply
Ross Bowman
Investor · Charleston, SC · Member since 2019 · 112 posts · 126 votes
6y
Originally posted by @Jermell Shavers:
I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

Dude what market are you getting properties at 40k or less cash and renting for 905 and up? That sounds great.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Ross Bowman:
Originally posted by @Jermell Shavers:
I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

Dude what market are you getting properties at 40k or less cash and renting for 905 and up? That sounds great.
you can do this in almost any inner city area of the mid west and rust belt and some deep south..

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Joe P.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
6y
Originally posted by @Ross Bowman:
Originally posted by @Jermell Shavers:
I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

Dude what market are you getting properties at 40k or less cash and renting for 905 and up? That sounds great.

Pockets of South Jersey, believe it or not, also are in this category. It's more like 60-75k for 1000-1200 rent, but still, yes, its possible. Now the taxes...that's what kills you in NJ.
0 Reply
Ross Bowman
Investor · Charleston, SC · Member since 2019 · 112 posts · 126 votes
6y
Originally posted by @Jay Hinrichs:
Originally posted by @Ross Bowman:
Originally posted by @Jermell Shavers:
I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

Dude what market are you getting properties at 40k or less cash and renting for 905 and up? That sounds great.
you can do this in almost any inner city area of the mid west and rust belt and some deep south..

I didn't realize that! I'm going to see what I can find. I'm in the south myself (South Carolina) so I'll start around in the south east and try to find an agent for that. Thank you sir!

0 Reply
Ross Bowman
Investor · Charleston, SC · Member since 2019 · 112 posts · 126 votes
6y
Originally posted by @Joe P.:
Originally posted by @Ross Bowman:
Originally posted by @Jermell Shavers:
I’m starting to doubt my c class rentals. I met someone who finances all of her rentals and I guess I kinda got caught up in what she was talking about. I buy my properties cash 40k or less since my financing options are limited. My c class rentals aren’t bad they cash flow 100% and they rent for 905 and up with sec 8 which in a c class I’m perfectly happy with. Why am I doubting myself now ?? Should I try for B or A class properties.

Dude what market are you getting properties at 40k or less cash and renting for 905 and up? That sounds great.

Pockets of South Jersey, believe it or not, also are in this category. It's more like 60-75k for 1000-1200 rent, but still, yes, its possible. Now the taxes...that's what kills you in NJ.

Wow I'm surprised South Jersey has anything like that. Didn't realize it.

But I definitely believe you on the taxes! I'm originally from Jersey and I do not regret leaving.
0 Reply
Andrew Watson
Rental Property Investor · Atlanta, GA · Member since 2015 · 36 posts · 44 votes
6y
Ross,
We pay cash, and we’re all-in (purchase price, closing costs, renovation) for $30-$35k. We obviously don’t invest in Beverly Hills - we rent to good people who happen to live in lower income areas.
On a home that we are all-in at $35k, our goal is to rent it for 700-750. They may be in ‘transitional’ areas, but our homes are nice - what we call “bulletproof chic”. We generally have multiple, qualified applicants on the first day of open house.

If we find a good deal and don’t have the cash on hand we will go to one of our investors to provide a private mortgage, secured by the property. With these numbers we can afford to pay generous returns to our investors, provide a nice home to our residents and still make a fair profit.
2 Reply
Andrew Watson
Rental Property Investor · Atlanta, GA · Member since 2015 · 36 posts · 44 votes
6y
You’re not alone. I think most of us feel the same way. We’re backed up on a re-hab right now, but on our way over to check on the progress of our new house we had to stop and look at two more...
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Steve HyznyPro Member
Investor · cedar lake, IN · Member since 2017 · 32 posts · 18 votes
6y
I have 5 paid off class C rentals, I use 150 of my cash flow to buy Merck stock each month in a DRiP account. Makes me feel better diversifying.

Because of them I am now looking at out of state rentals. I manage all myself but am looking for managed properties as my next level.

I am not stopping my class C's since they work and will allow me to move up to A and B's

We always grow from our experiences, so my growth is taking me out of state, I hope. If I stumble on my way uphill as I learn more, I have a solid base to fall back on to keep moving forward. With 440K in properties and 35K debt I feel comfortable to make a move where I'll be financing bigger deals and if something happens I have equity to use. So I can afford a bad tenant, roof repair, covid issues because I stand on a solid base.

When you finance everything its like an upside down pyramid. One block can bring it all crashing down. I right side pyramid with a solid base will last for 100's of years. Your family will appreciate it long after you are gone.

Let others do what they do and keep doing what works for you and expand when you are ready.
3 Reply
Ross Bowman
Investor · Charleston, SC · Member since 2019 · 112 posts · 126 votes
6y
Originally posted by @Andrew Watson:
Ross,
We pay cash, and we’re all-in (purchase price, closing costs, renovation) for $30-$35k. We obviously don’t invest in Beverly Hills - we rent to good people who happen to live in lower income areas.
On a home that we are all-in at $35k, our goal is to rent it for 700-750. They may be in ‘transitional’ areas, but our homes are nice - what we call “bulletproof chic”. We generally have multiple, qualified applicants on the first day of open house.

If we find a good deal and don’t have the cash on hand we will go to one of our investors to provide a private mortgage, secured by the property. With these numbers we can afford to pay generous returns to our investors, provide a nice home to our residents and still make a fair profit.

Wow that's awesome. Do you find these deals yourself or do you have an agent who finds them for you? I'd love to pick up a home, cash, for those numbers.
0 Reply
Ryan Howell
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
6y
Look solid to me. You could consider diversifying into something that will give you more appreciation in the long run and keep a mixture of both to balance you risk. It depends on your goals and what you want to accomplish.
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