All Forum Posts by: Latisha Douglas

I always push first time investors towards B or A- as the numbers turn out in real life vs just on paper. Plus these the client can be happy living in and get the high returns of 5% down owner occupants financing.

What rents do you all have for C class and below? One interesting thing about Chicago is our D and F class still has $1000+ per a unit. I can't imagine how awful these would be with cap ex costs if rents were only $5-600. 

@Latisha Douglas

I've learned from many mentors and through observation to never get into class D and really even class C tenants. It's a full time job and will just kill your ROI in the long run on your money and time. Other than the area gentrifying in the future I don't see a great investment play.

Why not just go with a different strategy all together, I.e. pooling money with others and buying a better asset?

I know it’s not the answer you wanted :/

Good luck!

 I have found the same in the education field where there are background checks and the like to get hired. Any profession that does screening for acceptance and employment in my book is a value add on a tenant application because there is a second set of eyes reviewing that person. 

Oh, I have exactly the same problems when I advertise like mad. The only way I've managed to get around this is to have the tenant in hand well before I have the property done and ready to go. I am always running a renovation, and nine times out of ten, I have the tenant lined up before I have the renovation finished. So I don't exactly advertise the property as it comes online. I already have multiple candidates lined up and vetted who would like to live in one of my properties, and the property is usually spoken for well before it is finished.

Certain professions, I've found, produce MUCH more reliable tenants than others, and in my town, licensed practical nurses and facility-based nursing assistants who have been employed with the same near-monopoly health care provider in our area for five years or more are practically bulletproof. Most of my tenants are drawn from this segment of the population and related professions. This will also go a long way to explain why, while I think Section 8 is a great program in my area, I vastly prefer non Section 8 rentals -- I am leveraging an unusual local advantage.

Why rent to anyone else when the medical profession will do 3/4 of your vetting for you?

@Latisha Douglas you need to screen your tenants well, don’t just take anyone because you are guaranteed the rent by sec 8. Look for families with working parents and good credit, bank account and good employment history. Also run background checks and make sure they have never been evicted. You need to check court records as sometimes background checks don’t pick up evictions like they claim they do.Im

In many markets, the difference in management challenges between C and D class can be big...and lumping them together may lead to the wrong conclusions about C class in those markets.

Regardless of the class property , 

A or D , the tenant must pay rent when it’s due. 

My C class property is not different from my A property in the way I manage them . 

Train your tenants - Adhere to the lease in terms of what’s their responsibility and what’s yours . 

In my lease , they know after 48 hours if rent is not paid I start eviction . Plain and simple. I’m in this to make money not friends. 

At least 50% of the game for us is being able to screen lots of applicants. I currently do this with my non-Section 8 properties by keeping my rents low. If you're running Section 8, on the other hand, you need to advertise a lot to get a lot of applicants to find the gold in the dross.

There's a lot to know, beyond that. One very large part of it is being able to get the work that needs to be done on the property done cheaply. My way of dealing with that is doing it myself. We are self-managing DIY landlords. If you can't do the work yourself, then you need access to a capable, hardworking, and cheap handyman, and in this economy, they are a very rare breed.

Lastly on my extremely abbreviated list, YOU HAVE TO LIVE THERE. You're not going to get it done with 3rd party property managers working hard to bleed you white across state lines. The loss opportunities are just multitudinous in C/D-class properties. These places are usually old, cheaply built, and were previously managed by incompetents. You have to be there to be on top of things yourself, or you'll be taking a very long ride on the broke train sooner rather than later.

Frankly people don't change.. this is what it is.. and will be a continual battle for you.. that's why the properties are so cheap to begin with.. you need them to be that cheap to make up for the bad debt  broken items and yearly hud inspections.

you want different results buy nicer properties.. that's the bottom line.. 

@Jim K.   Jim K is one of the low C D class experts on this site I would see if he will chime in.. He will tell it like it is.