All Forum Posts by: Mark Shaffar

@Bill Gulley15k in 1957 accounting for 58 years of 4% inflation should be worth 146k today. I guess you could make an argument though that C neighborhoods might not keep up with inflation. Perhaps a C neighborhood house in that city went for 8k then and 40k today.

@Steve BabiakI think K. Marie has the space after one letter so it doesn't show up for me, but maybe I'm just not patient enough

@Shai NeubauerI'm not sure how objective it is:) It's an attempt to do a better job comparing apples to apples. An A neighborhood property with 12% ROI is a very different thing than an advertised 12% ROI in a C neighborhood. Probably very different tenants and different upward potential

Our company still does some work in the twin cities (Calhoun Ventures) but now we focus on Milwaukee which is far cheaper. @Ray MulliThanks for the article post

@Rhondalette W.good point about eviction costs

@Frank DurhamThat sounds ridiculous but I guess if it's legal and money is going into the neighborhood...

@John Hyattanother way to look at it is to say some investors are happy with singles and doubles, while others will sit on their cash, losing money to inflation and waiting for that home run. I'm more of a singles, doubles and triples investor.

@K. Marie Poe I can't figure out why I can't hypertext your name, anyway You mean Mobile Home investors right? I assumed that the biggest reason for especially distance investors to avoid low end properties was headaches, but more and more I think the financial reasons are as much or more a reason not to. This is especially true considering what @Andrew Syrios said about lots of maintenance costs are the same no matter the price of the house. Another thing I have been thinking about recently is how in low end neighborhoods you often get into situations where you get less than what you put in during a rehab. A 5k new roof doesn't necessarily add 5k in equity to a house you paid 20k for whereas in an A neighborhood your rehab leverages the value to get into a whole new class of retail buyers.

@Richard C.I put in some numbers just to have something to work with. Milwaukee is a very different market. It's growing, not booming, it's low priced compared to the rent. In Beijing, $1M will buy a crummy condo that wouldn't pass section 8 standards and still be miles from city center.

@Steve Babiakgreatschools.org is very helpful info, some sites like Zillow embed that info on their site.

@Bill GulleyThanks for the input. I would argue that this entire thread is about location. Perhaps I'm just looking at a different angle. I certainly agree that buying in a neighborhood with mostly higher end well maintained houses, near great schools and in a thriving economy has great potential for appreciation. But I think that if you take a very long term look, and I think Robert Shiller would agree, that appreciation can't simply outpace inflation very long otherwise almost no one could buy. I think it is possible to find homes with a good chance of appreciating but when I look at my long term goals of financial freedom I never think in terms of equity in a house but rather having passive income greater than expenses. I more than doubled my money in 2 years investing in Beijing through rapid appreciation so I'm not complaining:) but looking at that $5k per month goal is what keeps me working hard at real estate. I love the idea of having freedom to do whatever I feel called to do without the hassle of worrying about a paycheck to pay for dinner. To me, that is the definition of wealth.  I'm about halfway there.

@Fred RamosI had a similar experience in St. Paul with rentals in C neighborhoods. They still cash flow OK and I can handle the headache but my hunch is that even without the stress/ headache issue  the simple costs of vacancies, maintenance, and turnover would make the bump up to B worth it

@K. Marie Poe The difference is only $15k but also 37% more expensive for less than 37% more rent. On paper the ROIs look so much better the farther down you go. Ideally, we would do an analysis where we take >20 properties in each class in 10 cities and compare to see what the final net ROI is on each asset class including appreciation, cash flow, vacancies, maintenance,...,ten years later but that is unlikely to happen. I guess my goal in this thread was to hear different peoples' experiences with their ROIs in different classes attempting to ignore the headache factor and just focusing on numbers.

@Ryan DosseyNice idea! Unfortunately your next investment next to a PD will cost you an extra 10k because you are bidding against other BP readers.:)

I talked to Abe in Shanghai and he was saying they can do translations if you like and have the clients directed towards a bilingual agent who contacts you or to the American selling agent directly. There is one other person interested for $20/mo. I think a few of us together each with like 20 properties or less might work for a trial.

@Curt Davis

 I just paid 55k plus closing costs on a house that will rent between 875 and 925 from the turnkey provider I work for in a decent mixed neighborhood of owner occupied and rentals. This is a pre-rehab cash deal though (Buy Rehab Rent Refi strategy in BP lingo). I do agree with you though that it is definitely hard to find good deals as more investors are looking at Milwaukee.

@Bryan H.Way to go on an awesome deal!

@Franklin Tarterare you the low headache tenant?:)

@Gilbert DominguezI dig the quote "what is cheapest to get turns into the most expensive to keep" I also appreciate your desire to give back to the neighborhood by buying D class and rehabbing-it reminds me of a previous discussion about revitalizing neighborhoods through REI. A friend of mine says he likes to do REI in B neighborhoods in order to do it sustainably and hope that that activity will trickle down into lower end neighborhoods. I don't have enough data to really take a strong opinion on it, but I love the win-win idea of doing well by doing good

@Jay Hinrichsopinions on how to stop communities from devolving? Definitely see that ABC neighborhood classifications have huge swings in prices in different markets. I threw the examples out there to get us something to work with. I just happen to know Milwaukee better than other cities. Not all of us have street by street encyclopedic knowledge of most US cities like you Jay:) Also, I dig the new logo.

experiment