Picking A Property Type

There are 30,000 properties to choose from. We don't have time to see them all.

"I want a good deal in a good neighborhood." Yep that narrows it down to about 10,000 properties. The ideal investor breaks down a property description that sounds like this, "I want something in the $60k range, in a C or D rated neighborhood that is in C or better condition." Now we are in business. I can show that investor the top 20 properties in that category.

I will then send you a list of properties that closest fits what I think you want. We can adjust from that and perhaps spend a couple of hours scouting to confirm that is the type of property you want.

There is a little bit of a "chicken before the egg" issue here but most folks have a good idea of what they want to spend. You have already probably done some homework before you got to this page so I don't need to tell you something you probably already know.

A property that is in an "A" neighborhood, with an "A" equity rating, an "A" income rating, and in "A" condition isn't for sale. If it did exist, it was sold before it was listed by the banker's cousin. If you are waiting for the holy grail, you will be waiting for the city bus in death valley. I'm pretty sure there is no city bus in Death Valley...

If you are handy, get stuff in the "C" or "D" condition and roll up your sleeves. If you have rental experience and know how to thump heads, pick stuff in the "E" and "F" neighborhoods. If you are intimidated by the whole real estate investment experience, get something in a "B" neighborhood.

If you don't live in town, I don't recommend properties that are in "D" or worse condition or properties that are in "E" or "F" neighborhoods. Those properties are slippery and you can fall quickly. Cheap labor or managers are unreliable. Professional labor or managers will eat your cash flow. Either way you lose.

If you sister lives in an "A" neighborhood and has never rented a property out, you will want to keep that in mind. Properties in "A" neighborhoods always have poor cash flow and are usually priced at market. I have found that relatives and friends offer the worse advice if they don't have any investment experience. If your friend or familiy has investment experience, bring them along. I'm confident that I can even teach them a thing or two.

The biggest myth I have to squash is the tenant quality and neighborhood quality correlation. If a property in an "A" neighborhood is not priced right, it will never rent. I can rent a house in an "F" neighborhood in 1 week if it's priced below market. I take the mystery out of this for you by showing you what your gross and net rent will be 3 weeks after you close.

I evict just as many tenants in "B" neighborhoods as in "F" neighborhoods. Quality is a function of price. If you advertise below market rent, you can be very selective about your tenants and get the best quality. Smart investors just don't care because they lease/option their properties.

There is no way around this simple fact of life. No matter how you cut it, history shows that a single family home outperforms a condo every single day of the week. A $50k condo will double in terms of income and appreciation in about 14 years. A $50k 3/2/2 single family will double in 10 years. Do you want $100k in 10 years or 14 years?