All Forum Posts by: Nicholas Baker Wood

@Dean D. In Central Arkansas, I don't feel that much is being done to improve the lives of impoverished people living in D areas. There is also no minimum standard that properties must be kept to, which allows landlords with unsavory intent, or just landlords who are oblivious as to the state of their property, to let their properties fall into disrepair. Sadly, many poor families cannot afford anything better than a property in very poor condition.

I also operate in Tulsa, OK, and the narrative here appears to be different. There are many local private entrepreneurs who are donating, and cooperating with the city, to provide quality low-income housing, and the same are also developing socially beneficial landmarks in historically recessed parts of the Greater Tulsa area.

You're correct that no one can do it alone. The ideal investor, in my mind, is one who wants to build up the ground zeros in their investment market of choice, while simultaneously building up the zeros before the "." in their bank accounts :) Those ideals are not mutually exclusive.

Every investment has a level of risk and reward. Hopefully, as risk increases, so does potential reward. Unfortunately, in my experience as a property manager who’s company is responsible for the management of nearly 800 residential units in central arkansas, I can tell you that investing in class D areas is a challenge for investors.

Sections of North Little Rock, for example, have been epicenters of some of the most first-hand horrendous risk scenarios playing out, such as:


A gang fight breaking out in broad daylight in the street in front of an 8 unit apartment we manage as our remodeling crew was there painting. Someone pulled an AK-47 out and started gunning people down, meanwhile bullets were spewing at the building where our maintenance staff were ducking for cover and on the phone with me scared for their lives. The police shows up after a few were dead, including someone dead on the investor’s property, and the man with the automatic weapon had been run over and killed by a truck.


In Little Rock, in a D area that is trying to become a B area, but has a long way to go, a lady decided she wanted to catch the trash cans on fire at the curb while full of trash. This burned down most of the picket fence in front of a property we manage, and almost reached the wood-siding house. Had the FD not shown up when they did, the house would have likely burned down. That lady, the day before, threw a molatov cocktail into one of our tenant’s cars at a property we managed just a block away. His car was completely burned, and exploded in flames. Using both these incidents, and tying them together, myself, the PD, and fire Marshall were able to get two ladies behind bars for arson.

A kid was playing with gasoline at his grandmas house in North Little Rock. He spilled gas everywhere along the side of the house, and somehow the house caught fire and burned down completely. I get a call from our tenant while I’m mowing my grass, and he is frantically telling me the house next door is burning down, and his house is caught on fire too (the house we managed). The house next door burned down completely. The house we managed was declared a total loss. Our contractor decided to buy it from my investor at a low price, and had to have the house rewired 3 times, because some crooks came in and broke through the plywood on doors and windows, and stole all the wiring to sell to the scrapyard, likely for drugs.

I was showing a property to a disabled veteran in North Little Rock. Very much a D area. The veteran was wheelchair bound, and was mostly paralyzed in his legs. He was just so excited that we finally found a place he could live. I was excited to show him the place, too, since it was a difficult property to fill. As we walk in, my heart sinks. I see that all the wiring has been stripped out of this house. I see that they cut into the cage housing the window hvac unit, and removed the unit, climbed in the window, and ripped out all the electrical conduit. I immediately told the hopeful veteran that he would not be able to live here for at least a few weeks until it was rewired. He was so sad, and I was too. I had to call the owner of the property and tell him what happened. Talk about a difficult conversation to have.

These are just a few of my personal experiences managing properties in solid D areas. These accounts don’t mention the possums climbing through subfloors and terrorizing a family, trudging through human and dog and cat fecal matter left behind by a tenant who was evicted, getting bitten horrendously by fleas, and encountering squatters hidden in back corners of houses.

There are reasons that experienced investors and contractors and property managers will try to suggest you avoid investing in D areas. 

I’d like to add that I started my personal investment and brokerage/property management career in central arkansas. I still have a team there managing properties and brokering deals under my supervision, but I have since relocated recently to Tulsa, OK to start a branch office of our brokerage here.

I have noticed that the laws concerning property management and landlord stipulations are very similar to Arkansas, which makes OK a landlord friendly state, too. The Tulsa area has a good mix of value add, appreciation, and turnkey cash flow properties. You may also consider checking in this market. I’m looking forward to learning this market more, and specializing in working with investors here.

Michael, I agree with Erin's assessment. I'm also a RE broker and property manager in Central Arkansas. Conway has gotten a bit priced-out, but (in my opinion) has the best draw for high quality tenants who are willing to pay higher rents. There are 3 colleges in Conway, and a growing industrial and medical sector.

North Little Rock can be an amazing place to do the BRRRR Method, but you have to be sure not to pay too much. The 1% rule is good for most of Central Arkansas, but in most areas of North Little Rock, you need to be looking to get closer to 1.3% - 1.8% of the purchase price in monthly rent in order to offset the risks of higher crime, higher turnover, and lower rent dependability.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $321,000
Cash invested: $8,500

I assisted an investor in purchasing the next-door 8 unit building for an extremely reasonable price. The owner of this 10 unit property, who was also a real estate broker looking to retire, reached out to me looking to sell. She let me know that she would sell her building for $275,000.00, and she asked me if I knew anyone who would purchase it. After thinking for about 5 seconds, I told her that I would buy it. This is a 10 unit property off a main road in a thriving commercial district.

What made you interested in investing in this type of deal?

I primarily find awesome deals for my client, but this one was too good to pass up! This is a low-income housing. I want my tenants to feel respected and valued, and I want to make sure they are treated fairly.

The tenants at this property are wonderful, and I do not plan to raise rents for quite some time, though I have already filled a vacancy at a higher rental rate. I have an on site tenant who keeps the grounds immaculately clean, and helps turn over unit.

How did you find this deal and how did you negotiate it?

The seller contacted me directly. As a licensed real estate agent, a commission I earn on a deal is 100% negotiable. In this case, I was confident that the property would appraise close to the $400,000.00 mark, and I told the seller the same. I told her that I would offer her $321,000, in return for a $45,000 commission to be paid to me, the buyer and buyer agent. MY lender was fine with this arrangement, and the property ended up appraising for $365,000 as-is.

How did you finance this deal?

15% down, 20 year Amortization, 5 year balloon. My negotiated real estate commission covered the majority of my down payment.

How did you add value to the deal?

By keeping more money in my pocket during the purchase, I will be able to outfit the storage room as a coin laundry, which will service both this building, and the 8 unit building directly next door. The income from the coin laundry should offset my lawncare, trash, and water charges, and also justify a rent boost, over time, with existing and future tenants. As units turnover, I will do moderate repairs, and boost rents to $650/mo for each 1 bed 1 bath unit.

What was the outcome?

1.) My income for 2022 is $45,000 higher. This will assist me in obtaining future loans, both for personal property and investment property.
2.) The $45,000 commission almost covered the entire 15% down payment. All that remained was roughly $10,000 of closing costs, and about 1% of a down payment.
3.) The property Appraised at $365,000, as is, which was $90,000 higher than her asking price of $275,000. Essentially, I created $90,000+ of net worth with only $10,000 out of pocket, plus the tax.

Lessons learned? Challenges?

In about 2 years, I plan to have rent rolls up to $5,500 - $6,000 / mo, and charging water, trash, and lawn care back to the tenants. The coin laundry will likely bring in $250-$500 / mo. At that time, I would consider selling, and get a check for about $300,000, or cash out refinance when rates drop eventually, and pull out about $200,000 of cash that I can than leverage for an asset of about $1,000,000 - $1,500,000, while retaining this cash-flowing property.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $321,000
Cash invested: $10,000

I assisted an investor in purchasing the next-door 8 unit building for an extremely reasonable price. The owner of this 10 unit property that I subsequently purchased, who was also a real estate broker looking to retire, reached out to me looking to sell. She let me know that she would sell her building for $275,000.00, and she asked me if I knew anyone who would purchase it. After thinking for about 5 seconds, I told her that I would buy it. This is a 10 unit property off a main road in a thriving commercial district.

What made you interested in investing in this type of deal?

I primarily find awesome deals for my client, but this one was too good to pass up! This is a low-income apartment building. I want my tenants to feel respected and valued, and I want to make sure they are treated fairly. Low income tenants are often exploited, and I want to change that narrative in a positive way.

The tenants at this property are wonderful, and I do not plan to raise rents for quite some time, though I have already filled a vacancy at a higher rental rate. I have an on site tenant who keeps the grounds immaculately clean, and helps turn over unit.

How did you find this deal and how did you negotiate it?

The seller contacted me directly. As a licensed real estate agent, a commission I earn on a deal is 100% negotiable. In this case, I was confident that the property would appraise close to the $400,000.00 mark, and I told the seller the same. I told her that I would offer her $321,000, in return for a $45,000 commission to be paid to me, the buyer and buyer agent. My lender was fine with this arrangement, and the property ended up appraising for $365,000 as-is.

How did you finance this deal?

15% down, 20 year Amortization, 5 year balloon. My negotiated real estate commission covered the majority of my down payment.

How did you add value to the deal?

By keeping more money in my pocket during the purchase, I will be able to outfit the storage room as a coin laundry, which will service both this building, and the 8 unit building directly next door. The income from the coin laundry should offset my lawncare, trash, and water charges, and also justify a rent boost, over time, with existing and future tenants. As units turnover, I will do moderate repairs, and boost rents to $650/mo for each 1 bed 1 bath unit.

What was the outcome?

1.) My income for 2022 is $45,000 higher. This will assist me in obtaining future loans, both for personal property and investment property.

2.) The $45,000 commission almost covered the entire 15% down payment. All that remained was roughly $10,000 of closing costs, and about 1% of a down payment.

3.) The property Appraised at $365,000, as is, which was $90,000 higher than her asking price of $275,000. Essentially, I created $90,000+ of net worth with only $10,000 out of pocket, plus the tax I will have to pay on the commission earned.

Lessons learned? Challenges?

In about 2 years, I plan to have rent rolls up to $5,500 - $6,000/mo, and charging water, trash, and lawn care back to the tenants. The coin laundry will likely bring in $250-$500 / mo. At that time, I would consider selling, and get a check for about $300,000, or cash out refinance when rates drop eventually, and pull out about $200,000 of cash that I can than leverage for an asset of about $1,000,000 - $1,500,000, while retaining this cash-flowing property.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $321,000
Cash invested: $8,500

I assisted an investor in purchasing the next-door 8 unit building for an extremely reasonable price. The owner of this 10 unit property, who was also a real estate broker looking to retire, reached out to me looking to sell. She let me know that she would sell her building for $275,000.00, and she asked me if I knew anyone who would purchase it. After thinking for about 5 seconds, I told her that I would buy it. This is a 10 unit property off a main road in a thriving commercial district.

What made you interested in investing in this type of deal?

I primarily find awesome deals for my client, but this one was too good to pass up! This is a low-income housing. I want my tenants to feel respected and valued, and I want to make sure they are treated fairly.

The tenants at this property are wonderful, and I do not plan to raise rents for quite some time, though I have already filled a vacancy at a higher rental rate. I have an on site tenant who keeps the grounds immaculately clean, and helps turn over unit.

How did you find this deal and how did you negotiate it?

The seller contacted me directly. As a licensed real estate agent, a commission I earn on a deal is 100% negotiable. In this case, I was confident that the property would appraise close to the $400,000.00 mark, and I told the seller the same. I told her that I would offer her $321,000, in return for a $45,000 commission to be paid to me, the buyer and buyer agent. MY lender was fine with this arrangement, and the property ended up appraising for $365,000 as-is.

How did you finance this deal?

15% down, 20 year Amortization, 5 year balloon. My negotiated real estate commission covered the majority of my down payment.

How did you add value to the deal?

By keeping more money in my pocket during the purchase, I will be able to outfit the storage room as a coin laundry, which will service both this building, and the 8 unit building directly next door. The income from the coin laundry should offset my lawncare, trash, and water charges, and also justify a rent boost, over time, with existing and future tenants. As units turnover, I will do moderate repairs, and boost rents to $650/mo for each 1 bed 1 bath unit.

What was the outcome?

1.) My income for 2022 is $45,000 higher. This will assist me in obtaining future loans, both for personal property and investment property.

2.) The $45,000 commission almost covered the entire 15% down payment. All that remained was roughly $10,000 of closing costs, and about 1% of a down payment.

3.) The property Appraised at $365,000, as is, which was $90,000 higher than her asking price of $275,000. Essentially, I created $90,000+ of net worth with only $10,000 out of pocket, plus the tax.

Lessons learned? Challenges?

In about 2 years, I plan to have rent rolls up to $5,500 - $6,000 / mo, and charging water, trash, and lawn care back to the tenants. The coin laundry will likely bring in $250-$500 / mo. At that time, I would consider selling, and get a check for about $300,000, or cash out refinance when rates drop eventually, and pull out about $200,000 of cash that I can than leverage for an asset of about $1,000,000 - $1,500,000, while retaining this cash-flowing property.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $321,000
Cash invested: $8,500

As a licensed real estate agent, I assisted an investor in purchasing the next-door 8 unit building for an extremely reasonable price. The owner of this 10 unit property, who was also a real estate broker looking to retire, reached out to me looking to sell. She let me know that she would sell her building for $275,000.00, and she asked me if I knew anyone who would purchase it. After thinking for about 5 seconds, I let her know that I would buy it!

As a licensed real estate agent, a commission I earn on a deal is 100% negotiable. In this case, I was confident that the property would appraise close to the $400,000.00 mark, and I told the seller the same. I told her that I would offer her $321,000, in return for a $45,000 commission to be paid to me, the buyer and buyer agent.

This commission, while taxable, accomplished several key advantages:

1.) My income for 2022 is $45,000 higher. This will assist me in obtaining future loans, both for personal property and investment property.

2.) The $45,000 commission almost covered the entire 15% down payment. All that remained was roughly $10,000 of closing costs, and about 1% of a down payment.

3.) The property Appraised at $365,000, as is, which was $90,000 higher than her asking price of $275,000. Essentially, I created $90,000+ of net worth with only $10,000 out of pocket, plus the taxes I will pay on the $45,000.

4.) By keeping more money in my pocket during the purchase, I will be able to outfit the storage room as a coin laundry, which will service both this building, and the 8 unit building directly next door. The income from the coin laundry should offset my lawncare, trash, and water charges, and also justify a rent boost, over time, with existing and future tenants.

In about 2 years, I plan to have rent rolls up to $5,500 - $6,000 / mo, and charging water, trash, and lawn care back to the tenants. The coin laundry will likely bring in $250-$500 / mo. At that time, I would consider selling, and get a check for about $300,000, or cash out refinance when rates drop eventually, and pull out about $200,000 of cash that I can than leverage for an asset of about $1,000,000 - $1,500,000, while retaining this cash-flowing property.

The tenants at this property are wonderful, and I do not plan to raise rents for quite some time, though I have already filled a vacancy at a higher rental rate. I have an on site tenant who keeps the parking lot and grounds immaculately clean, and he also helps turnover units as they become available.

This opportunity was too good to pass up, and I have also found several comparable, and larger, deals with a similar buyer advantage for my buyer clients this year already.

What made you interested in investing in this type of deal?

I primarily find awesome deals for my client, but this one was too good to pass up!

How did you finance this deal?

15% down, 20 year Amortization, 5 year balloon.

In Arkansas, you can; however, it would be unlikely that you'd be able to find a landlord who would allow you to sublet, unless you handled all cleaning, furnishing, and guest correspondence, and the monthly rent they would receive as the owner would exceed what they could get as a normal long term rental.

I'm a property manager, and have had several "AirBnB Arbitragers" approach me, requesting this very same arrangement. I always tell the owner of the property that this is an offer on the table, and they usually decline.

In my experience, charging a non-refundable pet damage fee (as permitted by your local real estate legislation), pet rent, and verifying background, income, and previous landlord references is a good way to mitigate the risk of a bad cat. In general, regarding pets, typically the pet is not the problem; the owner is.