All Forum Posts by: Brian Ploszay

My two cents:  Do it yourself when you are a small landlord.  Most of the people in Biggerpockets are smaller.  A property manager is well worth the money - if they perform.  Generally, they do not.   I use a service to collect rents and take repair calls.   But I do get involved with tenant relations, repairs and especially leasing.   In my market, leasing to the wrong people will sink you quickly.

I am an experienced southside investor.   It is a graveyard for amateur investors.  You have to carefully manage the buildings.  And most importantly, get tenants who will perform.  

Here's my advice:

The southside is big.  Know your areas.  Invest in the top 30% of areas for the southside.  Definitely avoid the lower end, despite the cheap prices.  

The housing stock is older.  Make sure you understand the condition of the buildings, its improvements and capital costs that will be required.

And again, you must manage and tenant the building carefully.  It takes twice the work compared to a building on the northside.

Apartments are very expensive.  But don't bet on them losing value anytime soon.  They are a favored real estate investment and attract aggressive capital.   They went up in value, at least in my market, because the rental rates went up significantly,  debt was readily available and interest rates are low.  Conclusion:  Hard and probably not wise to build a portfolio these days.  There are deals that can be occasionally found.

Properties in Cleveland, especially in lower income areas generally have high cap rates.   Make sure that this cap rate is not a "pro-forma" cap rate.   The description of this building suggests that it needs major capital improvements.  Those renovation costs may not be in the analysis.

I converted a building recently to gas from electric.  That saves tenants (or landlords) a lot of money.  It will also create value for your building when you want to sell it one day.  The electric buildings are a turn-off.  

I don't have much information about your buildings, but if you can run a gas line to each unit, then you can build a furnace room and ductwork through each unit.

I have a lot of experience in lower income neighborhoods.  You'll survive and prosper if you get tenants that will pay.  But the default rate of renters is high.   I survive using the section-8 program.

Investing in lower income neighborhoods is a graveyard for amateur investors.  It takes triple the amount of management time to make these investments work.  I would suggest to start slowly with a smaller building to gain experience.

I've been to St. Louis, which is a nice town, but there are some very lower income areas.  I noticed the housing stock was older, so expect lots of capital issues with the older buildings.  Make sure you don't buy a property that will sink you financially with required capital improvements.

That could be dangerous and you may have to feed the property.  Some capital improvement will happen over the next ten years.  It's a mediocre business plan and you can't acquire too many properties with a zero cash flow.   That being said, if you want to invest in prime areas, low rates of returns are the norm.  Often you make money on appreciation and rental growth will occur over time.