All Forum Posts by: Art Perkitny

Hey @Wilfred Hamlet, interesting question!

My first thought would be to find the areas with the oldest housing stock. Older properties are more likely to have deferred maintenance and wear and tear from years of entropy. This makes them great candidates for what you're trying to do. 

Looking at the data, it seems that the older housing stock, within the geographic area you're looking, are located more in the Nassau area. 

More specifically, I would concentrate my efforts on searching in the Hempstead/Garden City area. 

I have included a map visualization of the data I am using. The darker areas correlate with locations that have a lower median year built value, and thus larger selection of older housing stock. 

Hey @Sean Tift,  I believe this may help answer your question. The colors correspond to grades for each location. If your looking for B - C areas I would concentrate my search efforts on the outer ring areas and certain areas within the urban center. 

Hey @Howy Lerner, I agree with @Stephen Akindona. 

Based on the relevant data, Memphis is very block by block.  

As new investors, I would stick to the B/C Areas for your first acquisition. 

This will limit you to either the outer ring suburbs or select areas within the urban core. 

I have included below a visual map of areas within Memphis and their corresponding location grades to help you begin to identify potential areas to invest into.

@Skyler Harrington, I agree with both @Wes Blackwell and @Bob Okenwa sentiment. Not only are you new to REI but you also plan on being an owner occupant in your first property.

I suggest you give this a read: https://www.biggerpockets.com/blog/2015/12/09/class-a-b-c-d-real-estate/

I have provided you below with a chart and table showing how the grade of a neighborhood correlates with the price to rent ratio in the Phoenix Market.  

In addition to the chart I have included a map showing the areas, if you decided to maximize for price to rent, to look for potential properties. These places are predominantly C,D,F location and I would not suggest that as your first investment. 

@David S. Considering location only and based on the fact that both syndication opportunities posses similar return targets, I would also vote Lenexa. Both areas seem to be solid B locations, however the property on College Blvd and Hauser Street is surrounded by A/B neighborhoods all throughout. The property along S. Jackson Drive has much less buffer between it and the surrounding riskier C, D and F locations.  If the intent is to hold long term, having a buffer may prevent the location from worsening over time if the city as a whole trends downwards. 

Hey @Ashley Rodgers, all the suggestions so far I agree with.

I would also suggest taking a look at places in the south east/ south west. The cities in these two regions seem to have a bit of the two things you are looking for, that being close to the one percent rule and numerous B class or higher neighborhoods to select from. 

The Midwest is hands down better for finding high cash flowing properties, but I believe you may have better luck finding a property that fits you risk tolerance in these southern markets.  (See table and map below)

CSV of Cities: 

https://docs.google.com/spreadsheets/d/e/2PACX-1vQss70xtKxJaxXG5s4ST2y42QYf1NUzH__v2rd1zl6vyPv3-ikaE5Idldp6R64MCQtM0GNA7lW69Vhf/pubhtml

@Keinon Sam

Like what Cody is saying, but as a visual 

Also, if you haven't read this blog post yet 

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

This explains the location grade paradigm very well and should give you some clarity on where to start looking

@Samuel Chua

Hey Samuel, I  fully agree with what Corby is saying. I would check out this blog post by Brandon Turner if you haven't already. I goes into location grades and give an overview of why they are important for investors to know.

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

Based on your risk tolerance and investment goals you'll want to select a location that matches what your looking for. Location grades can help with this search process. 

@Chris Martin very interesting analysis.

I love these types of analytical discussions so I decided to take a look at the data myself!

Was interested to see if your assertion that CA buyers are more likely to 'park' money into properties held up against the relevant data.  Interestingly enough I found that Californian are not paying any more for 2 to 4 unit buildings than local investors are on average. I found this by first normalizing the purchase price by number of units in the property, giving me a price paid per unit figure. Then I aggregated by year sold. 

As for whether or not a builder can get $202 per sq ft on a SFR, I found that it is not the case. Over the past decade prices per sq ft on new construction SFR have gone up measurably, but it does not seem like $200/sqft has been reached in the Raleigh market.

Your guess as to when CA buyers purchased their properties is correct. The past 3 years account for a large percentage of 2 - 4 unit buildings procured by Californians. There was also a notable, yet predictable spike before the 08 crash. 

Lastly, here is map with drop pins for all the 2 - 4 unit buildings purchased by Californians with corresponding location grades. Seems like most are located in B/C areas with the notable cluster located in a D area. This, I would argue, reinforces the assertion that Californians are in fact looking to invest in real estate for cash flow, not just as a wealth preservation vehicle. 

Let me know if you any thoughts 

Hey @Ryan Catchings , I may be able to help here. What State are you looking to see zipcodes for? Also, what details for each zip do you need?