There are immense differences between successfully building and running a B-class turnkey buy-and-hold rental portfolio out of state and doing the same with a C/D-class high-cash-flow/low-appreciation low-income rental portfolio in your own area.

This section prescribes rules for tracing debt proceeds to specific expenditures.Treas Reg §1.163-8T(a)(4)Treatment of interest expense(i)General ruleExcept as otherwise provided in paragraph (m) of this section (relating to limitations on interest expense other than the passive loss and nonbusiness interest limitations), interest expense allocated under the rules of this section is treated in the following manner:(A) Interest expense allocated to a trade or business expenditure (as defined in paragraph (b)(7) of this section) is taken into account under section 163(h)(2)(A);(B) Interest expense allocated to a passive activity expenditure (as defined in paragraph (b)(4) of this section) or a former passive activity expenditure (as defined in paragraph (b)(2) of this section) is taken into account for purposes of section 469 in determining the income or loss from the activity to which such expenditure relates;(C) Interest expense allocated to an investment expenditure (as defined in paragraph (b)(3) of this section) is treated for purposes of section 163(d) as investment interest;(D) Interest expense allocated to a personal expenditure (as defined in paragraph (b)(5) of this section) is treated for purposes of section 163(h) as personal interest; and(E) Interest expense allocated to a portfolio expenditure (as defined in paragraph (b)(6) of this section) is treated for purposes of section 469(e)(2)(B)(ii) as interest expense described in section 469(e)(1)(A)(i)(III).Treas Reg §1.163-8T(c)(4)Allocation of debt; proceeds deposited in borrower's account(i)Treatment of depositFor purposes of this section, a deposit of debt proceeds in an account is treated as an investment expenditure, and amounts held in an account (whether or not interest bearing) are treated as property held for investment.

Have a rental in a B area here in LA that we redid floors, bathroom, added nice value to the property (at least 2x what we spent) and got a great tenant on a 3 year lease, and over 15% higher rent than before.

.- I'm under contract on 3 places right now: one is an A class in a great area, another is a solid B+ in a decent area, and this one is a lower-income one which was pitched to me as a B-- The purchase prices of the 3 homes I'm under contract with are pretty variable: 147k, 127k, and 70kMy goal with these purchases is to build a small portfolio of homes across slightly different neighborhood/risk types.

@Jason Graves The 5 plex is in Lebanon, Or and I would call it a B- type property.

What I run into is the seller thinks it is a B property and I think it is a C.

House hacking, in a B-/C+ area that still has access to easy public transit into the city.

It's a B to B+ neighborhood, and my guess is at least 85% of the homes are owned.

This property is probably a B-class property and I’m sure the renters are making minimum wage or close to it.

Regardless offering  A B  C terms is pretty easy.. and I guess if no one has heard of the concept this is good intoWe have had this one in our quiver since the mid 70s  LOL.. although sometimes you give them analysis paralysis and then they have to talk to their CPA and their attorney and they don't understand etc etc  ( seller) so probably want to figure out the business acumen of the seller  Lest you confuse them