All Forum Posts by: Eric Fernwood

Hello @William Hunt,

House flipping can be a profitable business, but you need expertise and the right market conditions—otherwise, you risk significant losses. I regularly see partially remodeled properties for sale, clear evidence of another "quick profit" flip gone wrong. So you have some idea about what's involved, below I'll share my process for successful flipping (I did a lot of flipping when market conditions were right).

Work Backwards to Make Money

The key to profitable house flipping is purchasing at the right price—pay too much and you're doomed from the start. To determine your maximum offer price, start with the property's likely sale price and work backwards. Let me demonstrate this process with an example property.

Suppose you find a promising property for flipping. Your research indicates you could sell it for $200,000 within 60 days after making it market-ready. After evaluating the necessary renovations, your trusted contractor estimates the work will cost $40,000 and require two months to complete.

Once you know the renovation timeline, you can estimate the total time from purchase through sale.

Hold Time

Calculate the total hold time by combining all time periods. Get estimated selling and closing times from your Realtor. Always add extra buffer time—projects typically take longer than expected.

Total Costs

Determine all rates and costs upfront—no guessing. Then, systematically work through each expense.

• Purchase Closing Cost - Since the purchase price is unknown, I estimated 3% of the anticipated sale price ($200,000 × 3% = $6,000). While this estimate is conservative, it ensures we have sufficient funds allocated for closing costs.
• Renovation Cost - The contractor estimated $40,000, so I added a 20% contingency buffer ($40,000 × 120% = $48,000). Since renovations rarely go exactly as planned, this padding is essential.
• Taxes - 6 Months x 1% x $200,000 / 12 months/Year = $1,000
• Insurance - $850/Year / 12 Months/Year x 6 Months = $425
• Profit - Profit is also an expense. I will assume a profit goal of 10%. So, 10% x $200,000 = $20,000
• Pad - Always include a contingency pad beyond the renovation buffer. The size of this pad depends on the likelihood of unexpected costs. For simple renovations involving carpet, paint, appliances, and light fixtures, a smaller pad suffices. For complex work involving electrical, plumbing, HVAC, roofing, or structural changes, you'll need a larger pad. In this example, I used $5,000.
• Sales Closing Cost - Sales Closing Cost - $200,000 x 8% = $16,000
• Utilities - $200/Month x 6 Months = $1,200
• Debt service - Debt service depends on the purchase price, which we do not know at this time. However, you can guess based on what costs you do know. If you add up all the above costs, the total is $97,625 ($6,000 + $48,000 + $1,000 + $425 + $20,000 + $5,000 + $16,000 + $1,200). Based on the total cost, you know that you will have to purchase the property for less than $100,000 ($200,000 - $99,741 ≈ $100,000). If the current interest rate is 7% and you can finance the property with a 30-year term mortgage with 25% down, principal and interest will be about $665/Month. So, 6 Months x $665/Month = $3,990.

Next, create a table with all the estimated costs.

Flipping Considerations

Below are important considerations for profitable flipping.

Market Condition

You cannot successfully flip properties in just any market. If the market is not in the right state, your odds of making money are significantly lower. Below are three market states and what they mean for flipping.

• Seller's Market - Inventories are low, and there is intense competition for properties. In this market, the difference between properties in poor condition and those in market-ready condition will be minimal, making it difficult to buy properties at the right price.
• Buyer's Market - There is excess inventory, and properties take a long time to sell. You will likely need to improve the property to meet above-average market conditions in such a market to sell it in a reasonable amount of time. It is challenging to estimate how long it will take to sell in a buyer's market and what the selling price will be. Additionally, you may need to discount the property to sell it. All of this creates considerable uncertainty.
• Balanced Market - In a balanced market, the number of buyers roughly matches the number of sellers. Typically, you can find properties in poor condition selling for significantly less than properties in market-ready condition. You can estimate the sales price and time to sell reasonably accurately. A balanced market is the best market for flipping.

Financing or Cash

In the above example, I assumed you could get a conforming loan. That may not be the case if the property is not in livable condition. If the property is not financeable, your options are cash or a hard money loan. The last time I worked with a hard money lender, the terms were:

• Interest rate: prime plus 5%
• Closing cost: 5%
• Term: 12 months
• Amortization: Interest only based on a 20-year loan

Below is a comparison of costs between a conforming loan and a hard money loan, assuming a $100,000 loan at a 7% interest rate.

As you can see, a hard money loan significantly increases your costs.

Sale Price

A costly mistake new flippers make is to start with the property's purchase price, add all the costs, and decide that will be the sales price. You do not control the sales price; the market controls the sales price. You need to be dispassionate and use a conservative estimate of how much the property will sell for and how long it will take to sell, including the time to close. Be conservative, because everything else depends on the sale price.

Contractor Reliability and Availability

Thoroughly investigate the contractor and talk to recent clients. The big concern is whether they stay on schedule and budget. Also, use progress payments with well-defined milestones. If you pay most of the funds upfront, you will have little leverage to keep them on track. Your best source of such services is your investment team. They will no doubt have worked with a contractor for a significant period. Also, you are a small source of income for the contractor. But your investment team may be a long-term source of substantial income. The investment team is where your leverage will come from.

Onsite Management

If we don't go on-site at least every other day, things start going wrong. Workers do not show up, substandard quality, wrong materials used, overruns start piling up. If you lack the time and skills to manage a significant renovation project, your costs can double, and the time required to complete it can also increase significantly. On-site management is critical.

Market-Ready

Market-ready means the property is in a condition that attracts the segment of buyers who typically purchase such properties, and they are willing to pay the full market price. Too often, flippers remodel the property to match their personal taste, rather than the buyer's. Your tastes do not matter.

You also need to weigh every item renovated against the minimum property condition you need to sell at market value. For example, if all recent sales have vinyl floors in the kitchen, you should install vinyl floors. Installing tile may decrease the time to sell slightly and increase the sales price slightly, but it is unlikely that you will recover the incremental cost. Additionally, you should utilize colors and other items that are popular with your target buyers. Know what you're doing before you start, or you will lose a lot of money.

Purchase Price

Between 2009 and 2012, I worked with many clients on house flips. We typically only get one offer accepted per month at our target price. This was frustrating for clients—some wanted to ignore the cost estimates and raise their offers to get a property under contract. However, paying more than your total estimated costs is a guaranteed path to losses. If you can't secure a property at the price you need, move on to another property.

In Conclusion

Flipping houses can be highly profitable when you have expertise and favorable market conditions. However, without proper knowledge or timing, substantial losses are likely. Remember that house flipping demands significant time investment—daily site visits are crucial to prevent serious problems. Before committing, carefully evaluate each step of the process. If you have any doubts, it's best to walk away.

Hello @Niranjan P Ghate,

If your goal is financial freedom, the investment city is the most important decision you will make, not the property. So, set aside all the property evaluation metrics first, and focus on selecting a market(s) that best aligns with your goals. Financial freedom isn't a one-time event; financial freedom requires an income that will enable you to maintain your current lifestyle throughout your life despite inflation driving up prices. You will need an income that meets all the following criteria, which are determined by where you invest. Below is a diagram showing location requirements (click to enlarge).

Essentially, your investment performance is tied to the economic health and outlook of the markets you invest in.

To maximize your chances of high performance, select a city that meets the following (basic) criteria.

Rapid and sustained population growth

Metro population >1M. Smaller towns often lack the necessary infrastructure to attract jobs.

Existing property prices appreciate faster than inflation. This enables you to grow your portfolio through accumulated equity rather than relying solely on your savings for investments. Check their pre-COVID track record.

Low crime. High crime cities do not attract new companies, which are necessary to create replacement jobs as current employers decline.

Low risk of natural disasters. Almost every week there are reports of cities where fires, floods, hurricanes, tornadoes, and earthquakes destroyed communities, including homes and jobs. So, even if insurance rebuilds your property, there may be no one to rent it.

No rent control. Many states (including California) have implemented regulations that act as a hidden tax on investors. Rent control can prevent selecting the best tenants, make it difficult to remove non-performing tenants, and cap rent increases below inflation rates. Never invest in any city with any form of rent control.

Low operating costs. Every dollar lost to overhead costs is one less dollar available for living expenses. Below is an overhead comparison of three popular investment states that have no income tax.

• State average property tax source.
• Texas and Nevada average insurance source.
• Florida's average insurance cost source

To put this in perspective, below is the estimated annual operating costs for a $400,000 property.

Compared to a property in Nevada, properties in other states require additional cash flow to compensate for their higher operating costs.

• Florida: +$11,311 ($14,636 - $3,325)
• Texas: +$5,712 ($9,037 - $3,325)

The takeaway is that operating costs can have a huge impact on financial independence.

Remote Investing

Most investors don't live in cities that meet all the requirements for financial independence. Therefore, the real question isn't whether to invest remotely—it's where and how to do it safely.

After narrowing down the list of cities based on the requirements I listed, find an experienced local investment team. While books, seminars, podcasts, and websites provide valuable general knowledge, you're ultimately investing in a specific property in a specific city. Only an experienced local team can provide the market knowledge and resources essential for success.

Niranjan, I hope this helps.

It's April, and it's time for another Las Vegas rental market update. For a more comprehensive look at the Las Vegas investment market, please DM me for a link to our blog. There, you'll find detailed information on investing, both in general and specifically in Las Vegas.

Before I continue, note that unless otherwise stated, the charts only include properties that match the following profile.

• Type: Single-family
• Configuration: 1,000 SF to 3,000 SF, 2+ bedrooms, 2+ baths, 2+ garages, minimum lot size is 3,000 SF.
• Price range: $320,000 to $475,000
• Location: All zip codes marked in green below have one or more of our client’s investment properties.

Overall market inventory:

The chart below, from the MLS, includes ALL property types and price ranges.

Rental Market Trends

The charts below are only relevant to the property profile that we target.

Rentals - Median $/SF by Month

Rents increased MoM, in line with our expectations. YoY is up 1.7%.

Rentals - Availability by Month

The number of homes for rent continued to decrease MoM, in line with our expectations.

Rentals - Median Time to Rent

The median time to rent continued to decrease in March, now standing at just below 25 days. This aligns with our expectations for the time of year.

Rentals - Months of Supply

Only one month of supply for our target rental property profile. This low inventory will continue to pressure up rents.

Sales - Months of Supply

There are about 1.1 months of supply for our target property profile. A 6-month supply is considered a balanced market. This limited inventory is likely to continue driving up prices.

Sales - Median $/SF by Month

The $/SF continues to increase MoM. YoY is up 6.1%.

Why invest in Las Vegas?

The goal is to achieve and maintain financial freedom. Financial freedom means more than just matching your current income—it's about sustaining your lifestyle permanently. To accomplish this, you need income growth that exceeds inflation. Without this growth, you won't be able to keep up with rising costs of goods and services.

What causes rents (and prices) to increase?

Supply & Demand

Unlike financial markets, real estate prices and rents are driven by supply and demand. What is the supply and demand situation in Las Vegas?

Supply

Las Vegas is unique because it is a tiny island of privately owned land in an ocean of federal land. See the 2022 aerial view below.

Very little undeveloped private land is left in the Las Vegas Valley, and desirable areas cost more than $1 million per acre. Consequently, new homes in these locations start at $550,000. Homes that appeal to our target tenant segment range from $350,000 to $475,000, so the supply of housing we target remains almost the same regardless of how many new homes are built.

Demand

Population growth drives housing demand and price and rent increases. Las Vegas's average annual population increases by 40,000 to 50,000 per year. What attracts people to Las Vegas? Jobs. Ongoing construction projects valued between $26 billion and $30 billion fuel employment opportunities. The most recent job fair featured over 20,000 open positions.

In Conclusion

While nothing is guaranteed, the combination of population growth and limited land for expansion virtually assures that prices and rents will continue to increase.

Thanks for reading my post. Reach out if you have questions or would like to discuss investing in Las Vegas.

Hello @Harvey Gill,

In my response to your post, I will describe how to narrow your rental property search and provide a source of reliable information.

Finding Performing Rental Properties

Searching for properties based on your or others' opinions and hoping they'll attract reliable tenants is both risky and time-consuming. There's a better approach. Like national retail store chains, start by identifying your "customer." Your customer is a high-performance tenant, or what I call a reliable tenant—someone who stays many years, pays rent on schedule, and takes good care of the property. However, reliable tenants are the exception, not the norm.

You can increase your odds of always having a reliable tenant by only buying properties that attract tenant segments with a high concentration of reliable people and working with a property manager who can consistently select reliable tenants. This is a rare skill—in my 17 years of working with investment properties, I've only known two property managers with this ability.

The Relationship Between Properties and Tenants

Every tenant segment has specific housing requirements and won't rent properties that don't meet all their requirements. For example, on the left of the image below is a tenant segment and their housing requirements. On the right are four properties, but only one matches all the housing requirements—making it the only one they'll consider.

You can leverage the housing requirements of a specific segment to attract tenants from your target segment.

Start by identifying a tenant segment with a high percentage of reliable tenants. You can identify what properties this tenant segment rents, and where they rent them, by asking multiple experienced property managers a question like this: "If you wanted to buy rental properties that attract tenants who stay many years, pay rent on schedule, and take good care of the property, what properties would you buy?"

Here's what I did: I asked about 15 property managers the same question, and 13 of them described the same properties. Once you know what properties and where they're located, you can build what I call a "property profile"—a physical description of properties that this tenant segment is willing and able to rent. For example, below is part of the property profile for the tenant segment we’ve targeted for over 17 years.

• Type: Single-family and select townhomes
• Configuration: 3+ bedrooms, 2+ baths, 2+ car garages, 1,100 to 2,400 SF, one or two stories, lot size 3,000 SF to 6,000 SF.
• Rent range: $1,900/Mo to $2,300/Mo (Current numbers)
• Location: See the map below

Once you have a property profile for the tenant segment you want to occupy your rental property, you can hand it to any realtor who can find conforming properties. Instead of evaluating hundreds of properties based on opinions, you'll only need to evaluate a small set that will attract the segment with a high concentration of reliable tenants. The critical information you need to evaluate a property is the rent range and time to rent.

Reliable Information

Zillow, Rentometer, and other online sources do not provide sufficiently accurate information to be useful. Online sites calculate the average rent per square foot ($/SF) for an area based on the number of bedrooms. When you enter the address of a property along with the number of bedrooms and baths, Rentometer (and others) calculates the rent by multiplying the average area price per square foot by the subject property's square footage. Below is an example of Rentometer's failures.

Rentometer predicts $1,900 to $2,200/Mo for this property. Would you expect this property to rent for the same amount as a similar property in good condition?

You need to understand how a good property manager estimates rent. Property managers focus primarily on current market competition rather than just looking at rental history. For example, even if similar properties, in similar conditions, previously rented for $2,300/Mo, your property will likely rent for around $2,000/Mo when comparable/competing properties are currently listed between $1,950/Mo and $2,050/Mo. What matters most is the current market conditions, not the historical data that websites like Rentometer base their estimates.

Everything you learn from podcasts, websites, books, and seminars provides only general information. When investing, you'll be purchasing a specific property in a specific condition and location, subject to specific local rules and regulations. The only reliable source for all the detailed information and resources you need to succeed is an experienced investment team.

If you like, I can provide the process and interview questions for finding and vetting an investment team.

Summary

Instead of hoping to find a "good" property, turn the process around. Start by identifying a tenant segment with a high concentration of reliable people. Create a property profile based on what and where they are renting today. Work with an experienced investment team to select conforming properties. Have your team provide the information you need to make an informed decision.

Hello @Morgan Painter,

A 1031 exchange only makes sense if your property has appreciated significantly since you purchased it. Depending on your cost basis, it may not result in any tax savings. To evaluate this, provide your CPA with your purchase settlement statement, receipts for improvements, and an estimated seller's net sheet for the current sale. They can calculate your potential tax liability based on your tax bracket.

If your tax liability is low, the choice is straightforward: sell the property outright and pay off your debt. If you will owe significant taxes, you will need to evaluate the tradeoffs carefully.

Selling the property outright means paying capital gains tax on the profit, but allows you to use the remaining funds to pay off debt and invest further. A 1031 exchange would defer the tax, but you would have to purchase a replacement investment property within some strict deadlines, and you would still need to make payments on your debt.

Before taking any action, have a clear plan for what and where you'll purchase your next property. If your goal is financial independence, choosing the right city is more important than the property. This is because your investment city determines all long-term income characteristics. Here are several key factors that your chosen city influences:

• Rents must grow faster than inflation. To maintain your lifestyle, your rental income must outpace inflation to compensate for the ever-increasing prices of goods and services.
• Your income must last throughout your life. Companies typically last only 10 to 18 years. So, the jobs your tenants have today will disappear in the foreseeable future. Unless new companies move to the city and create replacement jobs, soon all that will be left are lower-paying service sector jobs, and rents will fall, as will your income. Companies have many choices when selecting a city to establish new operations. The primary selection factors include:
  • Low crime. Companies are unlikely to establish new operations in high-crime cities. Never invest in any city on this list.
  • Pro-business environment.
  • Low operating costs.
  • Significant population. Companies establish operations in cities with excellent infrastructure. Typically, this only occurs in cities where the metro population is >1M.
  • Low natural disaster risk. Companies are unlikely to choose a city with a high potential for natural disasters. Not only is insurance expensive, if a disaster occurs, the facility could be devastated.
• Sufficient rental income to replace your current income. This will require multiple rental properties. If you purchase in a city where existing homes do not rapidly appreciate, all the money to purchase additional properties must come from your savings. If you buy in a city with rapid and sustained appreciation, you can use cash-out refinancing to acquire additional properties with little additional cash from your savings.

I hope this post helped with your decision.

Hello @Sarah Patel,

The goal of real estate investing is financial independence. However, financial independence isn't a single event—it requires a lifelong income that maintains your standard of living. The investment city defines all long-term income characteristics. Below are some investment city requirements for achieving financial independence.

• Your rental income must outpace inflation. Every time you shop, the same set of goods and services costs more than before due to inflation. Only if your rental income grows faster than inflation will you have enough money to pay these rising future prices. Rents and prices are driven by demand, which is in turn determined by population changes. Where there is sustained and significant population growth, prices and rents will rise. However, if the population decreases or remains static, prices and rents will decrease or not increase fast enough to enable financial independence.
• Your rental income must last throughout your lifetime. This depends on your tenants remaining employed at similar wages. The problem is that companies have an average lifespan of 10 to 18 years. If new companies do not create replacement jobs that pay similar wages and require comparable skills, your rental income will not last.
• Existing home prices must increase fast enough so that you can grow your portfolio using accumulated equity, not just cash from savings.
• Never invest in an area with rent control. I've had clients who told me that evicting a non-performing tenant can take over one year. Where I live, a typical eviction takes just 17 to 35 days. Additionally, rent control (and related restrictions) may prevent you from choosing the best tenant, limit your ability to increase rents to keep pace with inflation, and dramatically increase operational costs.
• Never invest in a high-crime city. Non-government jobs are short-lived. Most companies last only 10 to 18 years. During your lifetime, your tenants will need to find new employment multiple times. Unless new companies establish operations in the city and create replacement jobs with similar wages, the only available jobs are likely to be lower-paying positions in the service sector. When companies search for locations to set up new operations, they rarely consider high-crime cities. Never invest in any city on this list.

Very few cities meet all the requirements for lifelong financial independence.

Remote Investing

In my opinion, remote investing only works if you have an experienced investment team. Without one, you'll waste time and fail to achieve your desired results.

If you want to achieve financial independence, the city is the most important decision. Additionally, I would not invest in any city without finding an experienced local investment team.

Reach out if you have questions.

Hello @Brandon Seidel,

The decision to sell or keep your Carlsbad rental should be based on the property's likely future performance. If your goal is financial independence, you'll need rental income that can sustain your lifestyle for the long term. In our inflationary world, your rental income must increase faster than inflation. For example, if a basket of goods costs $100 today and inflation averages 5% per year, that basket will cost $163 in 10 years ($100 × (1 + 5%)^10). If your rent increases faster than inflation, you'll have the needed $163. If not, you'll need a job to make the difference. The key question is: Will your (Carlsbad) rent likely increase faster than inflation? The same question should be asked for any replacement rental properties.

Some other considerations:

• While cash flow pays the bills, appreciation is how you grow your portfolio. Based on what has happened over the last 10 years, what do you expect the average appreciation for an existing home in your price range to be for the next 10 years? If selling and replacing with rental properties elsewhere, what do you expect the average appreciation of the replacement properties to be? If the Carlsbad property has higher appreciation potential, it might make sense to keep it until you can find replacement properties that are likely to out appreciate it (AND generate growing rental income faster than inflation.)
• California is a pro-tenant, anti-owner state, which means a problem tenant could lead to an expensive, year-long eviction process. While such nightmare scenarios are unlikely, I think of nightmare evictions like cancer—when it happens to someone else, it's just a statistic. When it happens to you, it is a tragedy. So, this is a risk factor to balance.

Hello @Aurelie Slegers,

Whether you should sell, rent, or do a 1031 exchange depends on how the property is likely to perform in the future. Assuming your investing goal is financial independence, you need a rental income that will sustain your current lifestyle for the rest of your life. Since we live in a world with constant inflation, you need rental income that meets the following requirements:

• The rental income must increase faster than inflation. Every time you go to the store, you pay more for the same basket of goods. If you can buy a basket of goods for $100 today, and inflation averages 5%/yr, how much will you have to pay for the same basket of goods in 10 years? $100 × (1 + 5%)^10 ≈ $163. If your rents increase faster than inflation, you will have the needed $163. If not, you will be forced to get a job to make up the difference. The first question, is whether your rent is likely to increase faster than inflation in the future. If not, you should dispose of the property. The same consideration should be given to any future rental properties you buy.
• How long are tenants likely to stay in your (current) property? For example, we target single-family homes priced between $350,000 and $475,000 in Las Vegas, and our average tenant stay is over five years. Single-family homes priced over $550,000 in Las Vegas have an average tenant stay of between one and two years. With short tenant stays, your vacancy costs may be very high. Consider how long tenants who rent your property are likely to stay. Factor in the estimated time to rent and between-tenant make-ready costs to calculate your potential vacancy costs. Let me share a personal example: The first property I owned was a C-class 4-plex in Houston. Before I purchased the property, I estimated $2,000/month cash flow. Due to vacancy costs and property damage, I LOST about $1,000/month.
• While cash flow pays the bills, appreciation is how you grow your portfolio. The challenge in locations with unlimited urban sprawl is that existing home prices tend to increase slowly. Las Vegas, however, is different—there is very little undeveloped land available for expansion. As a result, undeveloped land in desirable areas costs over $1M per acre. Due to land scarcity and a rapidly increasing population, the average annual appreciation rate for the property segment we target exceeds 10%. Based on what has happened over the last 10 years, what do you expect the average appreciation for an existing home in your price range to be for the next 10 years?

I hope the questions pose some questions that will help you evaluate what is the best option for you.

I created a simplified flow chart that I hope will help you make this decision.

Aurelie, I hope this helps.

Hello @Antonio Bodley

Tariffs will increase the cost of building materials (at least in the short term), with the biggest impact falling on new construction. The reason I say this is because approximately 72% of building products come from Canada, and materials account for approximately 60% of the cost of a new home. How much will a 25% tariff increase the price of a $550,000 new home?

I will assume that 80% of the purchase price ($550,000) is the structure and 20% is the land. So, the structure cost is approximately $440,000 (80% x $550,000). Assuming the build’s profit margin is 10%, the structure cost to the builder is $440,000 x 90% = $396,000. If 60% of the cost of a $396,000 structure is materials, the total material cost is 60% × $396,000 = $237,600. If 72% of materials come from Canada, the cost of the Canadian materials is 72% × $237,600 = $171,072. With a 25% tariff, these goods will cost 25% more, or 25% × $171,072 = $42,768. Therefore, assuming a 25% tariff, the cost of a $550,000 new home will likely increase to $592,768. This will decrease demand for new homes since fewer people will qualify, so fewer new homes will be built, increasing demand for existing homes.

What about the knock-on effect? If new homes become more expensive, there will be more demand for existing homes, which will pressure up the prices of existing homes. If more existing homes sell, the demand for renovation will increase.

As Chris pointed out, there are a lot of factors at play.

Hello @Desiree Rejeili,

The problem with selecting a property type first is that you don't know which tenant segment will be attracted to it. Properties don't pay rent—tenants do. So before buying a property, you need to understand the performance of the tenant segment it attracts. The success of any property depends on whether it attracts a tenant segment with a high concentration of high-performing tenants. A high-performing tenant is someone who stays many years, pays rent on schedule, and takes good care of the property.

For example, in Las Vegas, the tenant segment we target stays over five years on average. Out of a tenant population of over 1,000, we have had only seven evictions in over 17 years.

In Las Vegas (it will be different in most cities), this tenant segment mostly consists of families with elementary school children and a gross annual income between $60,000 and $85,000. Children lock the family in place for extended periods. Our target tenant segment typically only rents single-family homes that meet a significant set of conditions.

Below are brief descriptions of what our target segment is willing and able to rent.

• Type: Single-family
• Configuration: 3+ bedrooms, 2+ baths, 2+ car garages, 1,100 to 2,400 SF, one or two stories, lot size 3,000 SF to 6,000 SF.
• Rent range: $1,900/Mo to $2,300/Mo
• Location: See the map below for the general areas

Any property that does not meet all the above conditions (and over 30 more) may not attract a high-performing tenant.

You can identify a high performing tenant segment for your city through property manager interviews. Let me know if you'd like specifics on how to interview property managers to obtain this information.

The difference between selecting a property type first and hoping it will attract high-performing tenants, versus selecting the tenant first and buying what they are willing and able to rent, can best be illustrated with two examples.

1. You might decide to place a baby clothes store in a specific area because you like that area. However, what if that area happens to be surrounded by a giant 55+ community? The assumption on the location resulted in the business failing.
2. If families with babies are your customer base, you can use demographics research to determine the location with the highest quality and density of your target customers and place your store there.

As always, follow the money, not feelings and opinions.