All Forum Posts by: Mark Shaffar

@Rhondalette W.I'm asking you to ignore headaches and monetize the investment:) This is just a thought expieriment.

@Randy E.and @Curt Davisplease stop trying to get me to promote on the forums:)  I especially agree with Randy's earlier quote about the difficulty of predicting appreciation. I made a killing in Beijing, China with appreciation but I honestly just feel like I was lucky and in the right place at the right time.

@James Wise I totally hear you man. I am trying to monetize headaches, which sounds crazy, but the idea is assuming you had an awesome PM and you never checked your email or phone calls from said PM, would the realized cash return be better on lower neighborhoods? I think not, but I'm curious anyway what others say.

@Rafael Noratand @Leo B.

 I'm with you, I've had my share of C and now am looking at B and above.

@Darren Budahn

 and @Curt Davis

 I suppose we all have different definitions of B neighborhoods. By B I mean middle class workers, small, older starter homes well maintained, grass is mowed, low or no crime, roughly half owner occupied, in Milwaukee renting for say $875-$1150 selling mid 50s to low 100s. Great tenants want to live there and I wouldn't mind living there and raising a family.

@Ericka ParrottMy broad question is what is the best long term ROI. A might have more equity growth and less cash flow. C maybe just cash flow. B a mix of both.

I'm curious about neighborhoods as it relates to turnkey/ buy, fix, hold purchases. Most of us have preferences for A, B, C, or D neighborhoods when it comes to investing and rule out the others. My hunch though is that especially when it comes to having other people manage the property and headaches that we really don't care as landlords about what neighborhood the property we own is in, but rather what the best predicted return on investment is. There seems to be a relationship between better neighborhoods and more rent with less destructive tenants and expensive vacancies, but also an increasing price that tends to go up at a higher rate than the rents. Assuming headache was not an issue, what would be the best long term ROI in a city with moderate economic and population growth? Let's ignore taxes and property management costs. All houses are rehabbed according to code and ready to go.

In this scenario would you rather buy a $25K SFH in a $500/mo D, a $40k in a $700/mo C, a $55k home in a $900/mo B, or a $130k in a $1200/mo A?

@Richard EllisWelcome to BP. It will change your life!

@Joseph UrreaOne helpful thing is to start small as a landlord, after 2 years of experience underwriters will start to look at the projected rent income from new projects when determining your debt to income ratio.

@Wynn Meyer

 The CAFR for Milwaukee is from 2013. Is that typical? I would also add that there is often a bit of a tradeoff. The big booming cities also tend to have high price to rent ratios as do the A neighborhoods with low crime. In both cases the tradeoff tends to be cash flow. So in your search you need to have a goal in mind for what kind of investing you are looking to do.

@William Hochstedler

 and @Ryan Mullin

 What I'm hearing you fellas say is that investing in marginal neighborhoods is good for a neighborhood but may not have significant measurable impact until you get the density and/or grassroots locals to push it. I wonder what it would be like to specifically partner with neighborhood associations and provide flips or buy, fix, holds there. Maybe those groups would be a good source of wholesale deals?

Great numbers! What are the neighborhoods like?

Good Luck @Kevin Trumbull!

@Soroush Mir Seraji

 I think all investing is risky, but great investors do everything they can to account for and lower the risk. That's why you hear a lot of discussion in BP about LLCs for legal risk, multifamilies to reduce vacancy risk, positive cash flow for paying the bills, fixed rate loans vs ARMs, due diligence about the neighborhood you are investing in, your rehab crew, your property manager, etc. At the end of the day, if you do your homework you can make a ton of money in real estate, but never completely without risk.