All Forum Posts by: Ari Hadar

@Marc Rice I’m new to the platform and can’t figure out how to message anyone - id love to see the map and practice analyzing!

@Gary Johnson

My best tenants and ROI has been in my C class properties in bad school districts etc. They aren't the most attractive looking neighborhoods with ugly lawns and landscaping. I'm ok with this. These people don't seem like they'll ever be able to qualify or afford to buy a home. That's my target tenant. It keeps my turnovers down and ROI good. My properties in good hoods with good schools don't perform nearly as well. And these tenants seem much more likely to move on after a year or two to get a place of their own.

@Jad Boudiab - Thanks for the explanation of your comps timing, that makes a significant difference, and thanks for humoring my feedback.

@Art Perkitny - Thanks for the thorough explanation on the modifiable areal unit problem... this is something I have sort of understood and have been long troubled by, but I never knew it actually had a name! Also thanks for listing out the metrics that you used in your own grading model... these aren't too far off from what I used in mine (albeit in a less sophisticated manner than you).

From my perspective, you have to take into account a wide range of parameters to determine the overall grade of an area, using hard and fast verifiable data. The baseline, which would fairly be called a high C grade, would be based on the median value for each parameter (at the MSA or county level), and then a tract that is “better” than the median in each respective parameter would score higher on the grading scale, and a tract that is “worse” than the median in each respective parameter would score lower on the grading scale. (Sort of like a GPA in high school or college, where each “parameter” is basically a course and is graded on a curve with a high C average.)

The grading model that I developed using only objective, measurable data, takes the analysis down to the census tract level. Each census tract in Cuyahoga County was graded using eight parameters, each of which is weighted consistently for each tract in order to ensure complete objectivity and consistency in the process. Each of those parameters, and the respective weighting, is as follows:

1. Median Income (20%)
2. 5-Year Median Income Change (5%)
3. Owner Occupancy Rate (10%)
4. Vacancy Rate (20%)
5. 5-Year Vacancy Rate Change (5%)
6. School District Grade (10%)
7. High School Diploma Holder Rate (15%)
8. Bachelor’s Degree Holder Rate (15%)

I chose NOT to include crime as a parameter in the model, as the measurements of this tend to vary from jurisdiction to jurisdiction, and reporting is not consistent either… but generally speaking crime correlates to the other parameters that ARE included in the model so its exclusion is not particularly problematic.

A few areas within the Cleveland market that are solidly in B territory include all of South Euclid, most of Parma, Parma Heights and Lakewood, much of Cleveland Heights, and portions of Garfield Heights, Shaker Heights, Euclid, Bedford, Bedford Heights, and Maple Heights. (But always keep in mind that even within any of these suburbs not all areas are created equally… some tracts will be B territory, and some will be better or worse.)

If you want to see the full detailed version feel free to inbox me.

 Yes. It's actually a living document. I frequently update it to maintain the highest level of accuracy possible.

If you've done deals out-of-state that are sight unseen for many times in the past, what are some factors that help make you more comfortable in doing these deals?

Well, you're dependent on the kindness of strangers (to quote Blanche DuBois) who don't have skin the game besides fees.  Guess I'd ask 4 questions:

1) Will they be around after the deal (which discounts brokers) closes?

2) You have a history with them that is good?

3) Will they make money if you close and none if you don't?  I'd weigh that factor.

4) You have someway to identify independently whether this is a "good" deal in that marketplace?

I can't say I've seen very many OOS buyers that are maximizing their incomes on investment properties.

@Susan Tan

This is great!

I put a property under contract today that I’ve never seen. My local partner walked the deal. I know the area, already own a property nearby, and I have a software tool I’m developing that gives me the demographic snapshot quickly - median income, crime, schools, population growth, and rent rates.

My partner walked it this morning, offers due by noon, had executed contact by this evening. Sent it off to the title company and lender. Should close with no issues by mid-December. It’s amazing how easy and fast it gets after you’ve done a lot of deals and have the right tech and relationships in place.

Hi Ari, what makes you say/think that?