All Forum Posts by: Art Perkitny

@Emily Hill

I would caution you against buying solely based on low price. 

The areas where homes are 30k and under will be higher risk areas.

The following shows the risk grade for areas within Toledo based on eight risk indicators retrieved from the most recent census.

If you are not sure what I mean by "grade" read this:

https://www.biggerpockets.com/blog/2015-12-09-class-a-b-c-d-real-estate

Now if I filter by home values, we get this.

As you can see, when filtered for home values 30k and under, most of the areas left will rank as F grade locations. These will bring with them risks such as high vacancy, late/non-paying tenants, crime and many others. 

Just something to consider, hope this helps! 

@Justin Seaverns

I would definitely suggest being rather conservative when underwriting for appreciation. 

That being said, the median home value appreciation is 4.23% annualized since 1996. 

Here is a histogram showing the frequency of appreciation by percentages. 

This data comes from Zillow and is based on their ZHVI dating back to 1996. They have data sets at the neighborhood level.

I suggest that you do the same analysis for your desired investment locations and see how appreciation has trended.

@Mark De sagun

The data suggests that Eagledale is going to be on average a D class neighborhood. That being said, certain areas within Eagledale will be better than others. 

I would suggests researching at a block by block level to gain a better understanding of the neighborhood. 

The map below should give you a better idea of the variation in quality within the neighborhood. As you can see, parts are classified as C and others F

Hope this helps!

@Rich Lopes, I second what @Jim Viens is saying about the area. 

The data suggests that the area is B/C Quality. As a matter of fact, this location is actually a sort of transition area between the B quality neighborhoods to the west and the C/D neighborhoods the the east. 

@Jacob Powell, absolutely!

I would start by looking at the macro market's fundamentals, that is the population, job and income growth over time.

After that, I would look to see what the rents and home prices are and how those are trending as well.

I would do a similar analysis, but at the sub-market level for the metro area you are considering investing in.

Hope this helps! 

@Robert Matelski, glad you like them! 

It generates scores and other metrics for the entire country yes.

How did you go about generating yours? 

Would love to see what you've made 

@Mark Millich, as other have already stated, this seems like a lot of risk to take on early in your investing career. 

Lower end properties may generate higher yields, but the risk is greater and so is the volatility. Meaning, your investment could actually end up losing you money unless you are very attentive and hands on. 

Unless the location is on track to turn around in the near to mid future, I would pass. 

@Jacob Powell, here's a resource that may help you begin to filter down the states you may be interested in investigating further. 

The median home values, as reported by the most recent american community survey, are mapped and color coded. The darker the color the more expensive the state is. If you are looking for lower cost area, the midwest and south will offer you that. 

That being said, most states have less expensive sub markets within them, so I wouldn't necessarily rule out looking closer to home.

@Dawal Limbachia, driving around is definitely the best method for getting a true feel for the area you are considering investing in, however this is not always accessible/economical.

My suggestion to you would be to utilize the wealth of information that is available to us via multiple government sponsored data-sets. 

The american community survey (annual census) is a great resources to start with.

The data can be viewed at a rather granular level, so studying individual neighborhoods is possible. 

Some of the data points you can view include:

- Rental Vacancy Rates

- Median Household Incomes

- Median Rents

- Educational Attainment Rates

- Population Counts and Changes

- Home Values

- Poverty Statistics 

and much more.

This will give you a pretty good idea of what to expect before ever stepping foot in the neighborhood you are researching. 

Other data sets that are valuable are the Bureau of Labor Statistics Current Population survey (CPS), Census Building Permit survey, and FBI uniform crime report. 

@Christa Kirby

First and foremost, I would define my investing goals. That is, what is my appetite for cash flow vs appreciation. Also, how risk averse/affine am I. These parameters will help decide what kind of yields you are searching for, which you can use to filter down your list of macro markets.  

Then I would start by looking at the macro market's fundamentals, that is the population, job and income growth over time.

After that, I would look to see what the rents and home prices are and how those are trending as well.

I would do a similar analysis, but at the sub-market level for the metro area you are considering investing in.

Other metrics that I find valuable to understand are household income, poverty, unemployment, and educational attainment. Also, the trend for the aforementioned metrics is also very important. 

Hope this helps!