Class D hoods anyone?

In addition, I am not talking about flipping houses here, I am referring to screening tenants and managing them. For right now, I just want to know who I can turn to for advice since one of my few Class D houses just became vacant. My 3 year tenant skipped out without giving notice,... but this is typical tenant behavior.

Today I have to round up my repair/cleaning crew and start getting his house to look and smell nice again. I bought this house in May 2018 for $5K from a burned out newbie investor. He paid $20K for this house in 2016.

--68.63.xxx.xxx

Class D hoods anyone? (by Deanna [TX]) Posted on: Sep 8, 2021 10:24 AM
Message:

Is Class D going to be low income/high crime? If you've got thieves in the area, you need someone on your team who knows who to talk to them, and you know they'll respect his advice to go bother someone else.

For example--- I bought a series of crummy houses from a burned-out landlady. (The Grayhouse series on my photo page was representative of the places we got from her.) We boarded up the windows of one house with plywood until we were ready to tackle the project. Someone kept stealing my plywood from my windows. Obnoxious, but not a big problem when plywood is $10/sheet. But when plywood is $50/sheet... yeah, frustrating.

It was finally time to work on that house. I mentioned in passing to my handyguy that someone had been stealing plywood from the windows, and I was worried people would vandalize the house while it was under renovation. He didn't even have to guess who was responsible for it. He went and talked to them and made it clear they were not going to mess with that particular address anymore. And no one has.

That's the sort of person you need on your team... someone who knows how to communicate with the native population. :)

--137.118.xx.xxx

Class D hoods anyone? (by Danno [IL]) Posted on: Sep 8, 2021 10:46 AM
Message:

If there's enough manpower to support the project, I'd say go for it. My commonsense thinking gives me the impression that the owner needs to have someone physically reside inside the property while it's being renovated/rehabbed. Otherwise, infrastructure improvements are going to disappear. Desperate individuals do desparate things. --174.209.xx.xx

Class D hoods anyone? (by Oregon Woodsmoke [ID]) Posted on: Sep 8, 2021 11:30 AM
Message:

Not me. I know the money can be good, but I don't like stress.

It seems to me that it doesn't matter what income level you are looking at, there will be some good honest people in the bunch. The trick would be to find them. Poor doesn't always mean dishonest.

Maybe set the place up to appeal to pensioners. --76.178.xxx.xxx

Class D hoods anyone? (by MikeA [TX]) Posted on: Sep 8, 2021 11:36 AM
Message:

I have a few that are on the border between C and D. Skip over a couple of blocks and clearly D the other way is clearly C. For starters when working on them do not leave anything inside, not even a screwdriver. It will be gone in an instant. Mine are wall heat and window shakers. I've learned to bolt the shaker to a piece of plywood cut to the window opening and then screw that to the window frame. Most are opportunistic thieves, they won't spend 20 minutes trying to steal a window air conditioner that's tightly secured. I do furnish stoves and refrigerators but those typically hand-me-downs from my better units otherwise they would be stolen as well.

Midnight move-outs are pretty typical, I require about one month rent as a security deposit so it usually works out. I'm pretty stern with those moving in about adhering to the lease. Many will test it and they quickly find that I don't play when it comes to the rules so they usually get lined up pretty quick (or they move-out). For mine that are on the border, they were a lot cheaper to buy and the rent really isn't lower than a few blocks into the C neighborhood so they tend to be cash cows. Correctly managed they can be very profitable with only slightly more headache. The biggest difference is how much junk/trash they leave at move-out which is typically a lot more than my better units. --209.16.xx.xxx

Class D hoods anyone? (by Robert J [CA]) Posted on: Sep 8, 2021 11:42 AM
Message:

I tried a couple of times to maintain units in "D" areas. You can't help those who won't help themselves. --47.155.xx.xxx

Class D hoods anyone? (by Robert J [CA]) Posted on: Sep 8, 2021 11:43 AM
Message:

I tried a couple of times to maintain units in "D" areas. You can't help those who won't help themselves. --47.155.xx.xxx

Class D hoods anyone? (by Robert J [CA]) Posted on: Sep 8, 2021 11:43 AM
Message:

I tried a couple of times to maintain units in "D" areas. You can't help those who won't help themselves. --47.155.xx.xxx

Class D hoods anyone? (by Sisco [MO]) Posted on: Sep 8, 2021 11:54 AM
Message:

Roy, on your grading scale is there any lower grades than D? Is D a war zone? --149.76.xxx.xxx

Class D hoods anyone? (by Ken [NY]) Posted on: Sep 8, 2021 12:09 PM
Message:

I have had plenty of them but no more,my state has made evictions so difficult that it is not worth the effort here anymore.Also i just dont want to have to fight with all the tenants to get paid anymore --72.231.xxx.xxx

Class D hoods anyone? (by Jason [VA]) Posted on: Sep 8, 2021 12:15 PM
Message:

It wouldn't be for me. I probably wouldn't take a house in a D neighborhood even if it was given to me. I prefer low stress, low maintenance tenants. For a D area, the rents are as low as the quality of tenants. --73.177.xxx.xx

Class D hoods anyone? (by S i d [MO]) Posted on: Sep 8, 2021 12:24 PM
Message:

I own a few that are borderline C-/D+. They were fine to get started, but no longer interested. They require so much extra time and effort, and the goal in the end for me is FREEEEEEDOM!

I'm keeping them for now because I've got them almost on auto-pilot and the rents are currently very high. If/when it slows down or becomes harder to evict, I will probably start sloughing off the worst ones and reinvesting into commercial.

--108.230.xxx.xx

Class D hoods anyone? (by Danno [IL]) Posted on: Sep 8, 2021 1:58 PM
Message:

Ken [NY] drives home a valid point. The eviction protections installed recently of late make it extremely costly and time-consuming to justify managing them. Twenty years ago, I managed a 24 unit C building. In a given year, I'd issue approximately 25 - Five Day notices, 8-10 eviction filings, and 1-2 actual sheriff put outs. Nowadays, the exponentially rising court and sheriff costs, the court delays and legal fees have discouraged / destroyed that business model. And to add to the insult, these corporate and tax-supported housing groups keep demanding for more! --174.209.xx.xx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 8, 2021 2:30 PM
Message:

Sisco,

My grading scale includes the F neighborhood where I will not buy in even if they gave me the house. My small city has only one F hood and it is a war zone down there. My definition of a D hood is where LL's own 90% of the houses on the block(s) and all tenants are supported only by monthly government entitlement checks. Yes, there is some crime but nothing like a true F neighborhood where the cops have a constant 24/7 never ending presence.

Deanna,

My Class D house is definitely in a low income hood but since I do not actually live there, I do not know what the real crime rate is. What is interesting here is that when a tenant in low income neighborhood calls me to report some of type of crime (like B & E), later on it turns out that a member of that tenant's FAMILY (cousin, ex-husband, etc.) actually committed the crime! Crimes in these hoods are committed by people who all seem know each other! --68.63.xxx.xxx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 8, 2021 2:55 PM
Message:

Ken (NY)

I knew you had houses in Class D hoods but I did not want to wear out my welcome with you in asking you for advice. I am fairly knowledgeable about the Class D hoods here in my city, but I do not know everything. I always can appreciate any tips from other LL's who are currently managing tenants in Class D hoods.

I had a good tenant for the last 3 years. He was the only tenant that actually paid his rent 2 days BEFORE the due date. And he did not trash the house he left me. He just up and left without saying good-bye. I am hoping I find his clone if there any left in the hood. --68.63.xxx.xxx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 8, 2021 3:45 PM
Message:

The house I am referring in this post has rented for $475/month. I am going 'test the waters' at $575.00/month when I post this house on Zillow next week. This small 2/1 house is bare-bones and no frills. Just clean and functional.

What does an 800 sq/ft 2/1 no-frills house of yours rent for? --68.63.xxx.xxx

Class D hoods anyone? (by T [IN]) Posted on: Sep 8, 2021 4:14 PM
Message:

No. 21 yrs ago; yes. Today, I want less headaches and will accept a smaller cash flow for this. Think NNN leases... --199.21.xxx.xxx

Class D hoods anyone? (by Deanna [TX]) Posted on: Sep 8, 2021 4:41 PM
Message:

Two or three years ago, my WWII-era 800 sf 2/1's rented for the $450-$500. Now I'm getting $550-$600 for them. In the town 30 minutes away with a better economic base, I get $750.

I'm sure I could get higher rents in both places if I tried-- and I do use my rents as a screening tool-- but I'm okay with growing my rents slowly and organically rather than artificially spiking them.

We (usually) don't have (much) violence around here. Just drugs and petty theft. And the people who get affected the most are generally people who have invited it into their lives. There are a few outlier situations, like the gang of people from a town an hour away who came here on a tire-slashing/car-break-in spree, but for the most part, we're very low on violent crime and under-state-and-national-average for property crime as well. --137.118.xx.xxx

Class D hoods anyone? (by Ken [NY]) Posted on: Sep 8, 2021 4:56 PM
Message:

Roy,2 bdr 1 bath in the ghetto about $1000 depending on which city.The bigger cities get more and the smaller cities are less.Keep in mind the taxes on that house are about $3000-$3500 here so i have to get $300 month more just to break even.I pretty much use A-D so these are pretty bad neighborhoods.This is where i got my start but i am happy not to even drive through there anymore.I am talking bloods and crypts gangs selling heroin and crack,people stealing copper out of vacant houses and occasionally occupied properties,shootings,prostitution.That is what i could afford when i started but i dont need the hassle anymore and i can make better money in better neighborhoods so i dont go there anymore --72.231.xxx.xxx

Class D hoods anyone? (by TA [CA]) Posted on: Sep 8, 2021 5:11 PM
Message:

This depends on what you mean by class D, but for the worst homes it isn't worth it even if they are dirt cheap. They look good on paper but once you factor in the time and cost to manage and extra costs for repairs and vacancy it doesn't add up. Too much time wasted screening tenants, long vacancies. In neighborhoods like this anyone with a job can afford to buy a home, or move to a better neighborhood and rent a nicer home. If every other home on the block is falling apart, high crime, bad schools it is hard to attract reliable tenants even if your rental is well maintained. You also need to deal with problems like stolen appliances that would almost never be an issue in class C neighborhoods, and it is harder to get reliable vendors. --107.3.xxx.xx

Class D hoods anyone? (by MAP [NY]) Posted on: Sep 8, 2021 5:17 PM
Message:

I did in the 90's but because of a dispute with my former employer (rochester ny housing authority) i don't anymore long story --174.208.xx.xx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 8, 2021 6:54 PM
Message:

Ken,

You said a 2/1 in the ghetto is $1,000/month??? My lower jaw will not open any lower here! This begs the question,..how can anyone living in the ghetto afford to pay $1,000/month in rent?? Is that what Section 8 pays the LL? This is insane. And those are my tax dollars too.

Deanna,

Like you, I use above market rents as a screening tool. It is nice to know that I am not the only one here that does this,..LOL. --68.63.xxx.xxx

Class D hoods anyone? (by MAP [NY]) Posted on: Sep 8, 2021 7:02 PM
Message:

In '91 i was getting $675+ for a smallish 3 bdrm SFH bungalow in class C- D+ --72.231.xxx.xx

Class D hoods anyone? (by mike [CA]) Posted on: Sep 8, 2021 7:28 PM
Message:

oh hell no! --75.80.xx.xx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 8, 2021 7:37 PM
Message:

Ken,

To me, Ghetto means Class F,..not Class D or C. Are you and I on the same page here? $1000.00 /month in a Class F ghetto? I am having a hard time wrapping my mind around this. --68.63.xxx.xxx

Class D hoods anyone? (by MAP [NY]) Posted on: Sep 8, 2021 7:43 PM
Message:

I guess letter classes are more vague. In my case om talking about small to midsized urban areas such as Rochester, Syracuse, Buffalo NY. F class to me would be Chicago, Philly, the Bronx --72.231.xxx.xx

Class D hoods anyone? (by Ken [NY]) Posted on: Sep 8, 2021 8:05 PM
Message:

Roy,I only use Class A-D D being most everyone on welfare,very few homeowners,boarded up houses on every block,drug dealing out in the open,shootings etc. How can they pay $1000 rent Section 8 and welfare but lots of SSI and SSD. --72.231.xxx.xxx

Class D hoods anyone? (by W [CA]) Posted on: Sep 8, 2021 8:20 PM
Message:

There is a book on this subject by an experienced LL called "Confessions of a Ghetto Landlord". He found that the secret to making money in a 'hood filled with druggies, losers, smokers, pimps, hos and crazies was an experienced insurance agent with a deluxe fire insurance policy on his cribs. D class neighborhoods are high risk . . . --201.140.xxx.xx

Class D hoods anyone? (by Deanna [TX]) Posted on: Sep 8, 2021 9:07 PM
Message:

W, I totally want to read that. :P My Google-fu is performing very poorly. Author? ISBN?

I enjoyed reading Desmond's "Evicted" not too long ago-- another MrLandlord Forum Book Club recommendation. ;) An interesting cross-section of situations. I didn't care for anyone in the book, really... but an interesting cross-section of situations. --137.118.xx.xxx

Class D hoods anyone? (by Ray-N-Pa [PA]) Posted on: Sep 8, 2021 10:45 PM
Message:

When UI started out, I bought just about anything someone would sell me......and some of it was true junk. I didn't care, I wanted to grow the business.

Then a strange thing happened. I started to get a life

I learned that if I had junky units, I would get less than ideal residents normally. With junky units, and junky residents - I wasn't that happy of my tiny empire.

But as I grew the portfolio, and worked thro economic cycles - I saw that I could trade up these units for the next level up. With that increase came better tenants....and a happier Me.

So would I consider class Ds now? The market is getting stronger here, so growing doesn't make as much sense as increasing quality. Growing is ever so much easier in a downward market when people want to give away units. --24.101.xxx.xxx

Class D hoods anyone? (by Roy [AL]) Posted on: Sep 9, 2021 7:17 AM
Message:

Ray N PA,

My house may be in a Class D hood and many of the surrounding houses maybe 'junky looking' but my house is not junky looking. The exterior has been painted to have that Class B look and the inside has that Class C+ look. I intentionally rehab this way in hopes of attracting the best tenant that neighborhood will produce. I had a great tenant here for 3 years but the question now becomes, can I get another one? All I need is someone with a job and a sense of responsibility.

People ask me why I do not sell my humble Class D houses. Because what most people do not understand is that ALL of rentals (C + D's) are worth MUCH MORE as rental units as opposed to selling them outright. The money here is not just great,...it is fricking phenomenal! Where else in the world can I get a min. 20% return my money? And in Class D hoods,...it is 30%. Higher risks equals higher rewards,..but only if you learn how to choose the right tenant. --68.63.xxx.xxx

Class D hoods anyone? (by Nicole [PA]) Posted on: Sep 9, 2021 11:58 AM
Message:

... For a D area, the rents are as low as the quality of tenants...

In my area, the exact opposite is true. I have always had a key target tenant of the working poor/benefit check receiving folks. One particular apartment buildin, I am currently getting for a 3 bedroom upstairs $1350. Downstairs, one bedroom with an extra little room, I get $975 but could get more but I've got an ideal tenant in there. A garage with zero utilities generates $145 a month. I pay gas for hot water, water, sewer, trash. Utilities for the building run me about $300ish a month. If I wanted to sell this building, I'd get around $100,000. Working class neighborhood clearly in the city but not the hood. House is like Ken's - late 1800s.

To move to a complex or the suburbs, the rents are about the same for the larger unit but the tenants pay all utilities. They get a much more modern place with washer/dryer/dishwasher, etc. My places are very clearly old houses turned into apartments. Smaller places in the suburbs are probably $1100ish.

Original question - I have always catered to the working poor/check receiving population, even now that I've been moving out of "the city" into the "suburbs" the past several years. --98.237.xxx.xx

Class D hoods anyone? (by mick [CA]) Posted on: Sep 9, 2021 5:21 PM
Message:

Deanna: the author is Ronald Faraci. Book is available on Amazon. --184.176.xx.xxx

Class D hoods anyone? (by mick [CA]) Posted on: Sep 9, 2021 5:31 PM
Message:

My rentals are in C/D hoods. From my experience the tenants who move in are moving within the zip code and don't expect anything fancy. My target group is S8 over 40 y/o. --184.176.xx.xxx

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