All Forum Posts by: Joshua Jones

@Joshua Jones

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.

Check out "How To Invest In Real Estate" by Joshua Dorkin and Brandon Turner.  It's a good overview of some strategies and ideas to help beginners start to set their path.  From there, there are several books about each specific strategy.  I recently read "30 Day Stay" to get myself ready to move into the MTR market.  

 Your network :) Deals are everywhere. I buy/ sell almost weekly. 

 Why would a property need to be on the market for 180 days ?? If you find properties you close, I REALLY think you need to connect with those doing deals and learn hands on,,,, 

Hi. This might not be the response you want, but meet with a few lenders and a cpa to get these answered. The experts always give the great options and they know the ins and outs of the business.