All Forum Posts by: Alan Asriants

 So you just provide a sub par apartment and low quality repairs? Maintenance and repairs not cheaper unless you are getting really low quality work and materials. And if you get high quality work then you are saving on materials. Which is its own issue. Also don't understand how cash flow makes you a bad landlord? So if I cash flow and defer items I am a good landlord but if I break even but have a solid home I am a bad landlord?

Like Stuart mentioned, toilet clogs, leaks, windows, etc will all cost the same on a class A rental or class D. 

Because of this, people who own in lower class areas, encounter more repairs, so they use cheaper quality work and materials because your money doesn't go as far anymore. Eventually this poor quality of material and labor will bite your wallet again. and the cycle continues. In class A areas you can more safely adopt the idea: put it in once the right way and forget about it. Tougher to do this when your house is worth 80k and your windows bill is 3-5k. So you go for the lowest bidder at 1k. Those windows barely last and now your window is leaking from poor installation. You try to call the contractor but he is dodging your calls.

Please explain to me how replacing a window in a class D area is cheaper than class A without forgoing material and labor quality? 

 Only the governments portion is guaranteed. The tenants portion never guaranteed. That portions is not decided by you but by PHA. Gov might only be responsible for 200 bucks - for example

 I think class A/B investing would be more about making a calculated and risk averse financial decision. 

Why do most people spend $15k on a course on Section 8 investing and those who invest in A/B real estate don't sign up for such stupidity. 

Emotions. Class D investment is literally someone ONLY looking at the numbers and not taking in other important aspects of the investment that are not financially related.

The savvy investor understands the value of location, the value of high quality real estate and does not put himself into a position of increased risk. 

There is a reason why credit scores exist. Default rates get higher and higher as you go down in score. Why would you risk your money ? Thats convincing yourself that the numbers on paper will play out in real life. this is when you get burned.  

If you were making decent money why did you sell? What was your ROI on sale?

 Class A section 8 tenants exist, but its needle in a haystack. for one property/unit its fine but to find it for many units will be a challenge. Also if you're in an A/B class area, why the need to go for Section 8? You have options in your tenant pool already. Its possible you can squeeze a little more from the government for rent but I think that its just so much more effort, and you're looking for something that is already really hard to find. 

You need to get licensing, extra inspections, work with leases on PHA terms, etc and on top of that you want to find a super star section 8 tenant. Seems like more of a headache than finding a decent tenant in your area... 

Just to give you perspective. In my class B rentals I have 50 contact for a listing. 45 were not qualified, 3 were decent, 1 backed out, and 1 was a good applicant. And this is considered a healthy market. For that section 8 search your number will be even less favorable

Yeah that looks pretty rough. You should take care of it. Thats a potential lawsuit waiting to happen.. 

Hey Ravi, the bucks county area is a great place to invest and close to the NJ/PA border.  Most areas here are class A/B and I personally invest here.

Its a solid place for appreciation and tenant base is strong. Finding a Mulit Family property is tough, but possible. You will need to be very competitive. There are nice townhomes here as well and a good amount of demand for them on the rental side. If you are looking at this area feel free to reach out anytime. 

1980's is fine. In my market 1980's is considered brand spanking new for Multi Family. What I'm more concerned about is why you want to buy in class C/D areas.

The 3 rules are location, location, location.

Focus on A/B

Might need to save up more, but dont buy a property for the sake of buying it. Buy a solid property. 

Good luck!

 I have 2 clients who constantly buy out of state and I have referred them great contractors and even check in on their properties from time to time. 

The reason this relationsip works is becasue:

1. they have an agent that actually cares, has experience, and will point them in the right direction (didn't mean to pat myself on the back too much, but you get the point)

2. I do not advise them to buy crappy real estate. They buy B class RE, that is not overdue on cap ex - unless the values make sense to do such a large scale reno. 

3. they have family in the area that also help out and know the areas - also can check on contractor work 

What you likely have is combination of some of those things in your OOS strategy. What Marcus is alluding to are the countless of newer investors who just finished a $15k course about buying the crappiest section 8 rentals in brimingham AL. that is a recipe for disaster. 

Its hard to find an agent to trust, and knowing the area really helps you understand if the person you are speaking to is just spewing BS or giving you good advice. Awesome good luck making sure that the contractor is doing a 100% solid job. I'm ready to buy a good amount of money that they cut a bunch of corners. 

If you used to live in a more affordable area and now moved to a more expensive one, maybe you have enough connections to go back to that market. 

Please do not chase cash flow when looking to purchase property out of state. Low purchase price and high rents can be attractive but there's a lot more to RE investing than numbers. 

Most investing is meant to be a passive strategy that not only brings you cash flow but also brings you wealth through appreciation. The strategy of buying a property in that price range immediately cut you from any sort of major appreciation gains in the future unless the area changes incredibly drastically. This is also called gambling. 

Typically in these price points and these attractive rental ratios, you will find yourself buying property in class D may be class C - at best - locations. 

It's important to note that this tenant class typically has high turnover rates. Higher eviction rates, higher property damage rates, and so on. Many investors who start in this type of real estate class don't survive very long. They are also the types of investors to start selling you a course, because the headline "How I made $50,000/m through section 8 rentals" is way more attractive than "Real estate investing - the long term game."

Not only is it risky to invest in these kinds of asset classes within your own local area, but let alone doing it out of state makes it even more difficult. There are plenty people here they can back me up and provide the real experience of the struggle. 

Also, when your rehab costs are more than 50% of your property value, you leave yourself no room for forced appreciation. It costs the same amount of money to rehab a property in a class A area and a class D area. 

As others mentioned before. If you want cash flow - buy a business.

Good luck