All Forum Posts by: Jeff Pantig

@Jeff Pantig

Beginning investors need to STOP believing all the fluff about rental investing, especially with the overheated real estate market trending to historic norms. Many believe unrealistic assumptions and often apply those assumptions to the wrong property classes.

In our OPINION (always verify yourself!):

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenants: Majority will have FICO scores of 680+.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenants: Majority will have FICO scores of 620+, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should often be used to also cover nonpayment & evictions.
Tenants: majority will have FICO scores of 560-600, many blemishes, but should have no evictions in last 2 years. Verifying previous 2-years of rental history very important!

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenants: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Hey Jeff, congrat's on starting your REI journey. Figuring out your "why" will help you determine strategy and location.

Are you looking for Cashflow, Appreciation, or a little of both?

Do you want to be hands on with the properties (i.e. rehabs, property management, etc.) or outsource these?

Are you interested in short-term, mid-term, or long-term rentals?

There are not many wrong strategies. It's more dependent on the lifestyle and goals that you're looking to achieve. I'm an investor and real estate agent in Sacramento. I'd be happy to discuss this further if you're interested. Best of luck.

Hi Jeff, welcome to the forums. It sounds like your goal is cashflow, if so, look for areas with affordable entry points, strong rental demand, and overall a good price:rent ratio. Here in Ohio, the most common cashflow market is Cleveland. Get your long-term investor strategy in order, and align your short-term actions to get you there. For appreciation, there's a whole plethora of factors to consider. For cashflow, it really comes down to price. You will make your money when you buy, not when you sell. 

@Jeff Pantig you don’t have to invest in your back yard. You can invest out of state if you want to. But I would encourage you not to settle for a turn key property out of state. That is a very slow process to build wealth and the cash flow probably won’t opulent be that good either. 

The quicker way to build wealth in real estate would be to add value to a property by finding a property off market that you can get fixed up and bring to market value. And as long as the total amount that you have put into the property (including the purchase price, the repairs, and any holding costs) is less than the market value then you will have forced equity. This is how a lot of people who build wealth quickly in real estate do it. It takes more work and more skills but it can be done just fine part time. 

Also, I would encourage you to take a look at the North Carolina market. Places like Greensboro and Winston-Salem have great properties that are priced low compared to other markets and they have solid rents. I have some people I have worked with in that market that could help you find properties under market value and I know other people who can help you get them fixed up.

Hey Jeff- welcome to Bigger Pockets! Happy to have you here. Memphis has a stable economy and has been trending up as far as real estate market growth, so I would consider it a good place to invest. Like @Noah Laker said, investing that far from your home base is definitely an ambitious (though certainly not impossible) move. If you are determined to invest outside of your backyard, I would recommend a market that you are connected to- history, friends, family, etc. 

Hi Jeff.  May I suggest you consider investing closer to home initially.  Figure out the process, do a few deals locally say 5 or 6.  Then you'll have some experience and confidence moving to out of state investing.  One of my mentors told me when I started to begin with 10 mile of your home.  Good luck.