Here's the number one problem with underwriting deals too conservatively. Fear will keep a would-be investor stuck in analysis paralysis forever.

As an agent who works primarily with investors, it's not my job to convince someone to invest. If you don't want to own real estate, that's totally fine with me. I'd rather not be responsible for talking someone into buying something they're uncomfortable with.

What I see all the time is someone passing on hundreds of deals waiting for the one that finally looks perfect on a spreadsheet. They want healthy cash flow, tons of reserves for every possible expense, a great neighborhood, low risk, and a bargain purchase price. Eventually they buy the one deal that finally pencils out after passing on countless better properties.

The reality is I've never seen a 1 to 10 unit property in a decent neighborhood pencil out with amazing year one numbers after accounting for healthy reserves for every damn thing imaginable. If it did, somebody else would buy it before the price ever got low enough. That's why Class A properties trade at lower cap rates and generally lower returns.

Most of my portfolio is Class A. To my tenants, you guys are awesome. I hardly ever think about you, and you probably hardly ever think about me. You live your life in your nice home, I live mine, and everything just works. That has value.

High margin deals in rougher areas are a different game. They can absolutely make sense, but they usually come with more headaches. If you need massive cash flow just to justify the risk that comes with owning real estate, maybe real estate just isn't the right asset class for you.