All Forum Posts by: Nate Garrett

Advertised cash flow and IRR are almost always overstated for C/D properties.

The tenants will be more difficult than A or B class properties.

You won't find a management company worth its salt that will take them on, unless they charge significantly higher fees.

The investors that I know that have been successful with C and D class properties own a significant number of them and self-manage them locally. 

If you're buying out of state, I would recommend buying high quality, desirable properties (class A/B), and hire a reputable property management firm to operate them. Your risk will be lower than with C/D properties, and you will probably end up generating similar return on investment.

It is a common misperception that rents almost always go up. In the aggregate (US overall), that tends to be true. However, all real estate is local and local markets tend to fluctuate more than the aggregate data based on local economic conditions.

Take the Tulsa, Oklahoma market for example. Here is some rental data from 2005-2013.

Source: http://www.deptofnumbers.com/rent/oklahoma/tulsa/

Number of years where rent increased from previous year: 5

Number of years where rent declined from previous year: 3

Say you began a lease in 2006 that expired in 2007. You, being the enterprising landlord, have an automatic rent increase of $25 / month in your lease because you want the tenant to get used to those automatic rent increases.

There's only one problem: your rent is now $45 / month higher than comparable properties. Goodbye, on-time tenant. Hello, vacancy.

Automatic rent increases are a bad idea. 

If your local market rises significantly, raise the rent appropriately and show the tenant evidence of the market increase, demonstrating that you are treating them fairly.

Hi @Harvey Altemose and welcome to Bigger Pockets!

Several years ago I used to work with George Sharp of Sharp Mortgage for hard money loans. He would do 100% of purchase price plus repairs, but I think he wanted to be less than about 70% ARV total, so you will have to find an exceptional deal, especially in the current market.

For those of you who say you always raise the rent, what do you do when rents go down in your market?

Tenants aren't ignorant, and they do shop....

Hi @Carlos O.

You might find this blog article that I wrote useful.

Bottom line, I recommend architectural roofs if you are going to hold the property long term. For around 10-15% cost difference you will likely get an extra 30% longer life over a 3 tab.

Recommend Melanie Richardson with First Commercial. They specialize in the smaller multifamily niche. http://www.first-commercial.com, (918) 605-1015. If you call please tell her I sent you.

@Jeff Trayer 

As a general rule, 2/1/1's have more rental demand where you would think they would - in areas populated by young professionals and empty nesters / retirement age.

If you are finding areas where 2/1/1's in general are selling at a deep discount, it's for a reason: there isn't much housing demand for them. The 2/1/1's will likely rent for less in these areas as well.

If you really want to get in the weeds, you can check out the census data to get demographics of particular zip codes.

We currently have an opening for an Assistant Property Manager at our property management firm in Tulsa, Oklahoma.

Please see the following for details or to apply: http://www.indeed.com/job/assistant-property-manager-136b5b30618ca6e6

@Brandon Low 

Do yourself a favor and get the word "passive" out of your vocabulary. That is a word carelessly thrown about by people selling books or guru sessions.

110 single family rental properties is about as passive as a Mack truck going 70MPH. You will work hard, very hard, to acquire, renovate, manage, re-capitalize, and then liquidate each and every one of them.

Can you do it? You betcha. Will it be "worry-free" as you say? Not a chance.

Hi @Bart Ford 

Welcome! I think you'll find Tulsa to be a great buy and hold market.

Let's hope oil prices stabilize so the local economy stays strong and rents stay solid!

Nate