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All Forum Posts by: Leon George

Leon George has started 1 posts and replied 6 times.

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6
Quote from @Maranda Tucker:
Quote from @Drew Sygit:

@Leon George there's a lot of good feedback from @Jonathan Greene!

Here are additional comments:

1) Buying out of state removes any local knowledge you have from assisting in your success, including knowing areas, people and costs. 
- We always recommend buying your first rental locally if possible and DIY managing to learn as much as possible before investing OOS.

2) Lots of crooks and incompetents in the PMC world:( They both cost you money.
- As already stated, you'll have a small portfolio. The challenge for a PMC is having the time to answer all your HUNDREDS of questions and handholding you as you learn, while still making money. Better if the company has a lot of info in writing that you can absorb to minimize this. Otherwise, they will just end up ignoring you and you'll get frustrated. 

3) Naive/newbie investors get burned all the time by only looking at the numbers - w/o fully understanding how the location/property/tenant will affect those numbers.
- They often get sold Class C or D properties while using Class A assumptions - then wonder why they are losing money.

Here's some copy & paste info that you hopefully find helpful:

-----------------------------------------------------------------------------------------

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

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.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

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.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), 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 be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

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

The City of Detroit has 183 Neighborhoods we’ve analyzed.

DM us if you’d like to discuss this logical approach in greater detail!


 This is an impressive response. I am going to apply this template for the Charlotte, NC market. Thank you!!


 Agreed!

Thanks all!

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6
Quote from @Drew Sygit:

@Leon George there's a lot of good feedback from @Jonathan Greene!

Here are additional comments:

1) Buying out of state removes any local knowledge you have from assisting in your success, including knowing areas, people and costs. 
- We always recommend buying your first rental locally if possible and DIY managing to learn as much as possible before investing OOS.

2) Lots of crooks and incompetents in the PMC world:( They both cost you money.
- As already stated, you'll have a small portfolio. The challenge for a PMC is having the time to answer all your HUNDREDS of questions and handholding you as you learn, while still making money. Better if the company has a lot of info in writing that you can absorb to minimize this. Otherwise, they will just end up ignoring you and you'll get frustrated. 

3) Naive/newbie investors get burned all the time by only looking at the numbers - w/o fully understanding how the location/property/tenant will affect those numbers.
- They often get sold Class C or D properties while using Class A assumptions - then wonder why they are losing money.

Here's some copy & paste info that you hopefully find helpful:

-----------------------------------------------------------------------------------------

Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.

If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

Similarly, if you put several Class D tenants in a Class A 4-plex, what do you think will happen to the property?

So, when investing in areas they don’t really know, investors should research the different property Class submarkets.

Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases:

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.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.

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.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), 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 be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

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

The City of Detroit has 183 Neighborhoods we’ve analyzed.

DM us if you’d like to discuss this logical approach in greater detail!


 Thanks for sharing, Drew. This is very helpful. 

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6
Quote from @Samuel Diouf:

Welcome to Bigger Pockets Leon!

Bigger Pockets is a great place to learn and connect with fellow investors.

If you’re looking to invest long distance, I definitely recommend building your core-4 team. This team consists of an Investor Focused Agent, Lender, Contractor, and PM.

Read this article on the "core 4". It explains the team that you should develop to have a strong foundation under you while investing remotely.

https://www.biggerpockets.com/blog/core-four-real-estate-team

Thanks, Sam!

Slight Update: After speaking with more BP members, I’m increasingly leaning toward making my first purchase in New York—a 4-unit rental property where I’d be my own landlord. It’s a bit intimidating since it’s outside my usual scope of business, but I’m committed to taking the time to learn how to be an effective landlord.

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6
Quote from @Jeffrey Blackman:

Hi @Leon George, welcome to BP! One other thing to keep in mind is that you have more financing options on 2-4 units than you do on 5+ units.


 Thanks for sharing, Jeffrey. I recently learned this on one of our BP podcasts. I appreciate the reminder.

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6

Hi Jonathan,

It’s so exciting to hear from you! Coincidentally, I’m currently listening to the BP Real Estate podcast, Episode 1,054: The Expert Investor: Early Retirement is a Mistake, Rent Instead of Buying. Thank you so much for taking the time to respond.

Here’s where I’m at in my journey:

  1. I don’t plan to rush into purchasing my first property. My initial interest in out-of-state investing stems from the high cost of multifamily properties in New York and the state’s renter-friendly laws. Do you think purchasing a property in Philadelphia, PA, and managing it remotely from Westchester, NY (Roughly 2-2.5 hours away) with the help of a local handyman would be too much of a stretch?

  2. I’m committed to keeping my options open and continuing to learn about being a landlord to ensure I’m well-prepared for my first purchase.

  3. To improve my ability to analyze deals, I’ve developed a two-part plan:

    • Join a local BP meet-up group to discuss my goals and support others.
    • Continue learning and engaging with the BP forum.

Thank you again for your guidance—it’s truly appreciated!

Leon

Post: New to BP Community

Leon George
Pro Member
Posted
  • New York
  • Posts 6
  • Votes 6

Hello BP members!

I’m new here and just starting my real estate investing journey this year.

I live in NY but am looking to purchase multi-unit properties (4+ units) in a growing market outside of the state.

Here are a few concerns I’m working through:

  1. As a newbie, is it a good idea to buy a property out of state? I plan to use a project manager but would love to hear your thoughts.
  2. Finding a reliable and trustworthy property management company feels like a big hurdle. Any tips?
  3. I’ve never analyzed a deal before, so while I’m excited, I’m also nervous about making mistakes. I know from BP podcasts that mistakes are part of the process, but I want to avoid anything that could jeopardize my family’s financial stability.

Despite these concerns, I’m ready to dive in! I’m here to connect, learn, and share what I pick up along the way as I (probably awkwardly) work toward financial freedom. Looking forward to learning from you all!