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Mentor
- “low class” usually means higher risk tenants, including high repair costs at turnover and higher risk of delinquency.
- Ohio (and many Midwest markets) have low to no appreciation. So that monthly cashflow is your only opportunity for a return.
- deferred maintenance and capital expenses on these 50 to 70 year old properties is often massively understated. Plus a new roof is still $15k to $20k, which kills years worth of “cashflow”. Make sure you do your own underwriting, don’t trust any underwriting from a seller / broker, and use very conservative estimates for capex or deferred maintenance unless you see actual receipts from the last 5 years for the big stuff.
- assuming you’re managing remotely, finding “good” property management in smaller towns can be much trickier / more expensive
- real estate has vastly underperformed the market outside of the early 2020 to late 2021 post covid zero interest rate boom. Your money might grow faster over 5 to 7 years in an index fund.
Subject Expert
I agree that if the property was worth the investment, it would have been swallowed up by a REIT that specializes in that market…
Go for it. I made the jump knowing that my monthly cash flow is my only return, not really banking on appreciation. The goal for me was to have a steady monthly profit instead of putting it into an ETF.
Not yet lol
Nothing wrong with focusing on cash flowing properties first, gaining some equity, then selling after a few years and moving into a more balanced equity/cashflow market