New member from SWFL, interested in Valdosta, GA markets

[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

[Michael Smythe]

@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!