Triplex in Class C Neighborhood - NEED HELP QUICK

[Ryan Copeland]

There is a triplex listed in a class C neighborhood, it's fully rented and 2 of 3 units have already been renovated.  It will cash flow $1500 per month.  Is it worth being in a Class C neighborhood?

[Denis Kalic]

@Ryan Copeland

I promise you this will be the most unbiased and best answer. I own from SFR all the way to apartment complexes from Class A to Class C neighborhoods.

Just speaking to Class C:

- Cash returns will always be better and appreciation usually worse

- Yes the average quality of tenants is worse. I have an apt building in Class C I literally have a tenant who doesn’t throw out trash and the PM has to babysit him (he pays on the first of every month always)

- Vacancy isn’t necessarily more and turnovers aren’t always higher

My strategy is I take a property in a Class C area and make it a Class A/B property. Labor is cheap in those areas you have to learn how to exploit cheaper cost of labor to renovate your property. I add new electrical, plumbing, kitchens, LVP flooring, tiled showers always. The reason I do this is because I take my sweet time to choose tenants. I like to have the best property in the neighborhood that way I can be a tenant chooser rather than a tenant taker. Have high standards and ask for (1st + Last + Security) those who are good people will pay up for it. This isn’t a magic bullet but I believe even in the worst places you can find the best people. I keep turnover and vacancy and legal costs low this way. To find a good PM, you need to find successful investors in the area and follow them that’s the only way. All PM’s are great when it comes to talking when you’re prospecting them. I don’t trust 95% of what they say. Let people criticize, but this is the way.

Btw, I don’t take section 8 in these properties. Let people say what they want, but I don’t want someone who is forever on Section 8 it should be transitory and not at my property.

Again, make your property the best, refi it to pull out all cash equity, and be a tenant chooser not a tenant taker. Best of luck bro.