I think B & C properties, specificly C properties are a good investment. It depends on the section & location of state you are purchasing. Certain areas have a higher crime rate then others. I research areas to see if any new industry or revitalization maybe happening to this area. I check rental rates, censes, local area news paper, blogs, & local county records. Would like to hear from othersl about B&C properties & how you go about buying them.
CJW
Hometown,
Welcome to REI Club.
Would you clarify what B & C properties are? I have an idea, based on your post, but I bet a lot of new investors don’t.
Also, if you don’t mind, use spell-check and your posts will be easier to read.
Furnishedowner
B & C properties are the condition of property. C properties often need a great deal of improvement.
A property is in good condition
B property fair condition
C property poor condition (Spend mor money fixing up)
This is my view & how I grade property when searching.
CJW
Hi,
A Class “A” property is generally, garden product built within the last 10 years or high-rise product in select Central Business District which may be over 20 years old and commands rents within the range of Class “A” rents in the submarket. Well merchandised with landscaping, attractive rental office and/or club building and generally have high-end exterior and interior amenities as dictated by other Class “A” products in the market. High quality construction with highest quality materials and finishes!
A Class “B” property is generally, product built within the last 20 years with exterior and interior amenity package’s, is dated and less than what is offered by properties in the high end of the market. Of good quality construction with little deferred maintenance and commands rents within the range of Class “B” rents in the submarket!
A Class “C” property is generally product built within the last 30 years, has limited, dated exterior and interior amenity package’s, improvements show some age and deferred maintenance and commands rents below Class “B” rents in the submarket and a majority of appliances are “original” to the property!
A Class “D” property generally is product over 30 years old, worn properties, operationally more transient, situated in fringe or mediocre locations and shorter remaining economic lives for the system components no amenity package’s offered and marginal construction quality and condition.
Lower side of the market unit rent range, coupled with intensive use of the property (turnover and density of use) combine to constrain budget for operations!
Yes the B & C properties can be good investments depending on income, expense, rent rolls, location, and vacancy factors!!
GR
Thank you for your response. I have read many of your replies from various post. You have educated me in many ways. I was not aware of how property scale worked. Saying that, my properties must be “D” properties. As a contractor I do gut them & renovate them to bring them to a “B” property. Example: Buy Duplex for 20,000.00, I but between 15 k & 18 k between both sides, taxes average 1,600.00, insurance for both units 400.00 per yr, vacancy for last 7 years 2 renters leave with 30 vacant. Our rent 425.00 per side, some higher & most are section 8. Your commits are very welcome. Can you explain meaning of roll rent?
Thanks
CJW
When you get ready to buy there is never a D property. No matter how old or run down the property they always list it as no lower that a C.
I think those are pretty stupid ratings, maybe only of use for apartment house buyers in newer areas. They make no sense to me.
Maybe I have only F properties?
Just refurbished a 100-year old little 1-bedroom house. Upgraded 200-amp electrical with new panel, washer/dryer hookup, bronzed west-facing windows, old-brick patios front and back, Mexican fire pit, hand-painted ceramic bathroom sink set into a $50 Goodwill dresser, antique furnishings, luxury linens. Best sunset views in town.
The bedroom is so small that I was thinking of painting a faux headboard on the wall. The queen bed just fits, it is a BEDroom. Nice flat-screen TV mounted into a recessed bookshelf, vintage Mexican pictures, glowing rust-colored walls. Cozy.
Initial rental value of $1350/month, more after landscaping is done. I’ll take my F properties over your ABC’s anytime. My units create memories for the tenants. None of the workmen ever wanted to leave…the Cable guy lingered–“This is sooo cool.” The plumber stopped by to check progress. Joggers slowed and then stopped.
The point of this is that old doesn’t necessarily mean “transient, deteriorated, run-down.” Old can mean charming, one-of-a-kind, quality constructed. Don’t buy properties based on some non-sensical formulary.
My property-- It’s little. It’s old. It’s cheap. Give me an F.
Furnishedowner
Why 200 amp for a 1bedroom?
Wanted to give them ample room for a grow-op? J/K
I also buy in the lower grade neighborhoods, I find houses with good bones and updated mechanicals for cheap, I then cosmetically make it the nicest thing in the neighborhood.
On my spreadsheet at least, my low grade properties cash flow better than any A, B, or C, that I could afford.
My strategy is partially based on lack of experience, funds and ability to get funds though.
Mike
HPM,
I pondered over the need for 200 amps, too. There was already 100 amp service. But there would be:
Kitchen:
Stacked electric washer/dryer
Refrigerator
Electric stove
Microwave
Small broiler/oven, toaster, etc.
Bathroom:
Ceiling electric heat/fan
Hair dryer
Living Room:
TV, DVD, etc.
Tenant’s computer
Window AC unit
Plug-In electric auxillary oil heater
Bedroom:
TV
In wall electric heater
New plug for through-wall AC unit to go in in April.
Plus electric water heater in add-on outside shed.
My new brother-in-law, a retired state electrical inspector, looked at it and said, “You’re gonna need 200 Amps.” Electrician said the same.
I can’t have that 6 AM tenant call–“My hairdryer went out! All the lights went out! I’ve gotta go to work! Omigod!”
By the way, I like your investment strategy. Works for me, too.
Furnishedowner