BiggerPockets

Detroit and Pittsburg lead the cheapo list, but Tampa and Vegas are coming on strong (or weak).

10 cheapest: Detroit, Pittsburgh, Rochester, N.Y.; Memphis, Tenn.; Tampa, Fla.; Cleveland, Tenn.; Columbia, S.C.; Dallas; Las Vegas; and Providence, R.I.

http://realestate.msn.com/article.aspx?cp-documentid=21303908&GT1=35000

Ok, so maybe the market says that Detroit and Pittsburgh are cheap markets, but why?

The economy is wreaking havoc on some of these cities and it's making noob investors salivate.

Hold up trigger - maybe you should look into the cheap but SAFE markets and stay away from the ones that are cancerous.

San Antonio for example. Not only are the prices stable, but its been listed as one of the best places to buy and sell, in the country!

If your looking for a market that is on the mend and has some great buys, you could try Las Vegas. A bit over priced in my opinion, but there are some real gems if you have the money to spend.

teh_homepwnerer

IMO: Jeff is right, they are cheap for a reason. Most properties here are not good for "buy and hold' investing. You will get negative appreciation in the cheap markets. In fact, sales prices in low income neighborhoods (Duquesne, Clairton, McKeesport) have dropped 43%, while better neighborhoods (Mt. Lebanon, Bethel Park, Upper St. Clair) have only dropped 5% in the last year (according to RealStats). Poor school districts continue the downward spiral, while the others are struggling to hold ground.

Here's a recent local article.
http://www.post-gazette.com/pg/09241/993996-28.stm


Pittsburgh's a hole, trust me. Great for the wholesaler trying to make a buck off the out-of-town investor... but don't pee on my leg and tell me it's raining. Now, dont get me wrong, I appreciate the influx of out-of-town money, every little bit helps. It's just that these properties are VERY management intensive with ALOT of tenant turnover. You just better "buy right" and protect your assets. Personally, my money stays out these depressed neighborhoods. For instance in Duquesne there are blocks, and blocks of vacant homes. In some blocks, every 4th or 5th house/lot is OCCUPIED. How can you make money in an area like that where anyone can buy any house for $8,000 and less.
I know a guy who got a house for $1 Buck in Duquesne. Put $15,000 in it, and couldn't get rent to save his life. Lucky for him, it caught fire. At least in areas like Mckeesport, the Municipality tears down 250 homes a year.

After I said all that, if you're still going to invest, MCKEESPORT is where I'd say the best chance of upside is right now... Cheap housing stock, some new construction starting, decent school district with great budget, AND most importantly the political will and resources to elevate the market.

I agree an investor can make money in any city. I've just never taken the "scorched earth" policy. To me, buying in some of those cities and dumping them on unsuspecting out of area investors, would make me queasy. It is too easy to do win-win deals in other areas on that list- like TX. Those will come back. Detroit, pittsburg and providence will always be holes. Tampa, dallas, vegas will ALWAYS have demand. Buyers can pay too much there and STILL come out ok over time imo. Not so sure about some of the others. Sunshine, business and recreation make my 3 can't miss opportunities. Buyers there will eventually be real happy. Rich in FL.

A true investor doesn't sit around for markets to come back, and a true investor can make money in any market. This ideal parallels my own success out in Pittsburgh, PA. Its true that the market is depressed and that RE investing for the buy and hold investor is somewhat management intensive. But again, if one cannot find the circumstances one seeks, then one must create those circumstances. Once you understand Pittsburgh and its submarkets through and through, you know which methods to implement and where which method works better than others. For instance, we buy wholesale properties and re sell them to landlord investors with owner financing. Some rehab and sell the properties, and others use a property management company to take care the day to day management. It all depends on the investor...

Certain cheap markets will rebound economically better than others. Once the economic trends for those areas improve, so will the market. Buy properties in an area that has a rough economic outlook, and you may be in for a rough ride.

Burg has some high taxes also. They have school taxes on top of the property taxes that triple the property taxes.
Agree with Mr. Stuart that you can't just take burg as a whole, there are many parts.