Today’s REI Classroom Lesson
In the classroom today, Dave Payerchin goes over the difference A, B, and C-Class properties and the risks involved with investing in C-Class homes.
REI Classroom Summary
From the neighborhood to the tenants, there are various reasons why C-Class properties can prove not to be as good of a deal as it looks on paper.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Dave: All right, everybody. It’s Dave Payerchin, your host with the most in the REI Classroom. Today, we are going to be talking about beware of C-class turnkey properties.
Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.
Dave: All right, everybody. As many of you know, some of you don’t, my name is Dave Payerchin and we are Columbus Turnkey Houses. We are one of the leading providers of turnkey properties across the country and we focus in the Columbus, Ohio market. We oftentimes get contacted by investors who are asking us about, “What is the ROI of the properties that you guys sell? Tell me more about the properties.” Here’s what we’ve found in our years of doing this. It is better to focus in on better areas or areas with better schools. These are oftentimes called A and B-class properties. This is going to be a better long-term investment for you, the investor who’s buying a turnkey property.
It’s really important that you know to put a guard up. There’s a major red flag, when it comes to C-class properties. Oftentimes, a C-class property is identified by a lower area or a lower income area is what I should say. Oftentimes, though, these C-class properties look amazing on paper. The ROI is through the roof, and you need to be very wary, when you see a property that almost looks too good to be true. Typically, this is going to be in a less desirable area. That means that the tenants are going to have a higher turnover. It’s going to be higher management or higher maintenance for the property manager. This is going to cost you money.
Even though the message of today is even though something looks really good on paper, it doesn’t mean it’s going to be good on long-term. We’ve also seen a lot of investors out there, buy properties from middle men. Basically, they’re paying way too much for these properties in less desirable areas and the investor’s not going to be able to resell this property for what they paid for it.
So even though it looks good on paper, a lot of investors out there are paying too much for these less desirable properties. It’s going to be a lot of maintenance and a lot of turnover. Stick with the A-class and stick with the B-class. That’s what we provide here at Columbus Turnkey Houses. I look forward to seeing you in the next class.
Mike: HomeVestors, the “We Buy Ugly Houses” folks, is a franchise system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level or whether you have no experience at all, but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more. Please note, the views and opinions as expressed by the individuals on this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky. Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
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