{"id":110169,"date":"2019-04-24T11:00:58","date_gmt":"2019-04-24T17:00:58","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=110169"},"modified":"2024-01-29T15:25:35","modified_gmt":"2024-01-29T22:25:35","slug":"invest-real-estate-low-cost-properties","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/invest-real-estate-low-cost-properties","title":{"rendered":"Why You Should Only Invest in $50,000 Properties or Less"},"content":{"rendered":"<p class=\"p1\">I know that this is going to be a very touchy subject for a lot of investors out there who have, unfortunately, lost a lot of money to shady <a href=\"\/renewsblog\/2015\/12\/15\/turnkey-real-estate\/\" target=\"_blank\" rel=\"noopener noreferrer\">turnkey operators<\/a>. But I also know it will be considered sage advice by investors like myself who have made a ton of money in this specific asset class.<\/p>\n<p>I truly believe you should only invest in properties that are $50,000 or less. Here&#8217;s why.<\/p>\n<p class=\"p1\">No, it\u2019s not the war zone and it\u2019s not the ghetto\u2014like a lot of you probably think.<\/p>\n<p class=\"p1\">I\u2019m sure that a lot of Midwest folks can vouch for me. I used to get laughed out of every room when I set up shop here in Toledo, Ohio. Now, it looks like investors are coming to Toledo because there aren\u2019t any deals on the East Coast and West Coast anymore.<\/p>\n<p class=\"p1\"><a href=\"https:\/\/www.biggerpockets.com\/blog\/how-to-find-a-real-estate-deal-when-there-is-no-inventory\/\" target=\"_blank\" rel=\"noopener noreferrer\">That\u2019s a separate topic<\/a>, but I do think there are many reasons why you should focus on properties under $50,000. I\u2019m just going to focus on two today. I&#8217;ll keep it very simple, short, sharp, and sweet.<\/p>\n<p><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/Z4QFfPAOdws\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h2>Reasons to Invest in Real Estate that Costs $50K or Less<\/h2>\n<h3>1. Less Risk<\/h3>\n<p class=\"p1\">The first reason is this: the less money that you invest, the less you are risking. Something that I tell everyone that reaches out to me and says, \u201cWhere should I flip? What should I buy? How much should I spend?\u201d I always tell them to spend the least amount of money possible.<\/p>\n<p class=\"p1\">Why? Because the likelihood of you losing money on your first couple deals is pretty high.<\/p>\n<p class=\"p1\">I didn\u2019t make any money on my first five deals. I only started making money later. I call it my Harvard degree, on which I&#8217;ve earned from making real estate mistakes. But I\u2019ve learned from them, and of course, I\u2019ve gotten better.<\/p>\n<p class=\"p1\">So find yourself a market, find yourself a lower socioeconomic area, find a property that you can negotiate well, and buy something cheap that just needs a cosmetic rehab. Do your best to sell it for a profit, and if you don\u2019t, do not get down on yourself.<\/p>\n<p class=\"p1\">Stick with it! I\u2019m sure over time you will start doing well.<\/p>\n<p class=\"p1\">So again, the less money that you invest, the less you are risking. Of course, <a href=\"\/renewsblog\/due-diligence-ultimate-guide\/\" target=\"_blank\" rel=\"noopener noreferrer\">do your due diligence<\/a>, become a market expert, and network with as many people as possible in that particular area.<\/p>\n<p class=\"p1\">And don\u2019t invest until you really have the right infrastructure set up from a team standpoint. You have to have boots on the ground and people who will have your best interest at heart.<\/p>\n<p><em><strong>Related: <\/strong><\/em><em><a href=\"https:\/\/www.biggerpockets.com\/blog\/buy-a-cheaper-property-with-higher-returns-or-a-nicer-property-with-lower-returns\/\" target=\"_blank\" rel=\"noopener noreferrer\">Cheap Properties with High Returns or Nice Properties with Low Returns?<\/a><\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-107108\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/military-real-estate.jpg\" alt=\"realtor giving house keys to homeowners\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/military-real-estate.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/military-real-estate-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h3>2. No Competition<\/h3>\n<p class=\"p1\">The second reason is there is such a large stigma surrounding these properties, there is absolutely no competition. In 2012, I moved to the U.S., and I\u2019ve been here in Ohio since 2013. I\u2019ve literally felt like a kid in a candy store for six years\u2014there\u2019s no competition.<\/p>\n<p class=\"p1\">I buy what I want, when I want, and I pay whatever I want for it, because nobody is buying here. Markets like Toledo, Dayton, Cincinnati, Indianapolis, Ft. Wayne, Detroit, Lansing, and even Kansas City are similar. Some of them have more of a ring about them though. There&#8217;s more hype and buzz around cities like Kansas City, Cincinnati, Cleveland, and Detroit now. But there are a lot of other tertiary markets like Toledo and Ft. Wayne that are smaller.<\/p>\n<p class=\"p1\">You would be surprised at some of the stuff we have here, and you would also be surprised at the types of assets that you can buy for $20,000 to $50,000. I guarantee you these are B-class assets.<\/p>\n<p class=\"p1\">I live in these areas. There are blue collar, working-class people in these areas, as well as white collar, working-class people in these areas. Prices are affordable and they do well in their jobs. They pay rent, buy homes, there\u2019s no riffraff on the streets, no boarded up homes, no vacant homes\u2014or very few\u2014you can\u2019t even spot them.<\/p>\n<p class=\"p1\">Guys, there is a huge stigma surrounding these homes for no reason. All of the guys on the East Coast and West Coast, buy yourself a ticket on Frontier or Spirit and get your butt here. Check it out for yourself!<\/p>\n<p class=\"p1\">Trust me, you will be very surprised by what kind of asset and the area you can buy in for $50,000 or less. I\u2019m sure a lot of Midwest folks are going to leave comments saying the same thing.<\/p>\n<h3>Conclusion<\/h3>\n<p class=\"p1\">So that\u2019s it. To summarize, the two key reasons why you should invest in $50,000 properties or less is because the less money you invest, the less risk you&#8217;re taking on. The second thing is there is a lot of unnecessary stigma surrounding properties at this price, but there is absolutely no competition.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-109859\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/06\/blog-ad-for-HML-page.jpg\" alt=\"hard-money-lenders\" width=\"700\" height=\"120\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/06\/blog-ad-for-HML-page.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/06\/blog-ad-for-HML-page-300x51.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/p>\n<p><em>Where are you investing? How much are the properties you&#8217;re buying? Is it working out for you?<\/em><\/p>\n<p><strong>Comment below.\u00a0<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p class=\"p1\">\n","protected":false},"excerpt":{"rendered":"<p>I truly believe you should only invest in properties that are $50K or less. This is particularly great advice for investors who are just starting out in real estate or those who are having trouble finding deals in their market (ahem\u2014East Coast and West Coast investors). Here&#8217;s why.<\/p>\n","protected":false},"author":1672,"featured_media":84219,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524],"tags":[],"class_list":["post-110169","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/110169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/1672"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=110169"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/110169\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/84219"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=110169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=110169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=110169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}