New member from SWFL, interested in Valdosta, GA markets
Member since 2024 · 2 posts · 2 votes
New member from SWFL, interested in Valdosta, GA markets
Most Popular Reply
Michael SmytheBusiness Member
Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes@Chris Rogers higher interest rates have caused most Class A property purchases to NOT cashflow for an approximate 3-5 years.
So, many naive investors are chasing Class B, C & D properties to cashflow, WITHOUT fully understanding the scope of the additional risks involved:(
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.
So, when investing in areas they don’t really know, investors should research the different property Class submarkets.
Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.
Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years
Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
PM us if you’d like to discuss this logical approach in greater detail!
Logical Property Management4.9457 Reviews
6 Replies
- 2yAdam BartomeoBusiness MemberReal Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
Hey Chris! Reach out if you ever want to talk real estate. I am a local investor, broker, and own a property management company.
Bartomeo Property Management4.7156 Reviews - 2yMichael McVetyBusiness MemberFort Myers, FL · Member since 2024 · 46 posts · 20 votes
Hi Chris.
I have been a local property manager in Fort Myers for 25+ years and if I can help you, let me know. The market is sliding somewhat (in some areas) so let me know if I can be of assistance and point you in the right direction.
Red Fortress Property Management Co.4.3314 Reviews - 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
@Chris Rogers higher interest rates have caused most Class A property purchases to NOT cashflow for an approximate 3-5 years.
So, many naive investors are chasing Class B, C & D properties to cashflow, WITHOUT fully understanding the scope of the additional risks involved:(
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.
So, when investing in areas they don’t really know, investors should research the different property Class submarkets.
Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 yearsClass C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
PM us if you’d like to discuss this logical approach in greater detail!
Logical Property Management4.9457 Reviews - 2yJeff TumbarelloPro MemberReal Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
Quote from @Chris Rogers:
Good Sunday afternoon everyone! I am a rookie investor looking to network and learn here. I do not have any investment properties currently, only my primary residence. I live in SWFL and work in the commercial insurance field as an agent/advisor. For SWFL locals, I would like to discuss your tactics in this current market, where prices are still way up and rates are as well. I cannot seem to find any deals in the region that make any sense- or are even close to making sense. I have discovered a market 5 hours north of me in Valdosta, GA where the numbers seem to make a lot more sense. I would love to network and learn from any investors in either market.
I look forward to meeting fellow BP members, this seems like a fantastic resource.
Chris Rogers
Located in SWFL and own properties in Valdosta. Feel free to reach out.
- 2yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Chris Rogers:
Good Sunday afternoon everyone! I am a rookie investor looking to network and learn here. I do not have any investment properties currently, only my primary residence. I live in SWFL and work in the commercial insurance field as an agent/advisor. For SWFL locals, I would like to discuss your tactics in this current market, where prices are still way up and rates are as well. I cannot seem to find any deals in the region that make any sense- or are even close to making sense. I have discovered a market 5 hours north of me in Valdosta, GA where the numbers seem to make a lot more sense. I would love to network and learn from any investors in either market.
I look forward to meeting fellow BP members, this seems like a fantastic resource.
Chris Rogers
Welcome to BP, you've come to the right place to learn and get started!
Harpoon Capital514 Reviews - Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 357 posts · 148 votes2y
I am an investor and lender in the Florida market. It's definitely challenging to get a deal to pencil right now. However, there are two strategies that seem to be working. The first is short-term rental properties. The right property in the right location with the right property manager seems to still be doing well. If you're open to short-term rentals, that could be one option.
If you're looking more at long-term renters, you (or your realtor) can negotiate seller credits into the offer and use those credits to buy down your rate. I have used this strategy with nearly every investor this year and it has been allowing my investor clients to cash flow on deals. If you have further questions about either option, send me a DM.
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