{"id":85938,"date":"2019-11-15T09:00:46","date_gmt":"2019-11-15T16:00:46","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=85938"},"modified":"2021-03-16T12:19:49","modified_gmt":"2021-03-16T18:19:49","slug":"cheap-real-estate-protection","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/cheap-real-estate-protection","title":{"rendered":"5 Ways to Protect Yourself When Buying Cheap Real Estate"},"content":{"rendered":"

America still has a significant number of inexpensive properties available for investors. How do you stay safe when investing in them?<\/span><\/p>\n

There can be great profits found in buying, remodeling, and flipping<\/a> or renting out<\/a> inexpensive properties. However, it is crucial to realize that a low price tag doesn\u2019t always mean a cheap or valuable deal. In fact, you can lose money\u00a0fast buying cheap real estate if you aren\u2019t careful. <\/span><\/p>\n

Here are some ways I\u2019ve managed to minimize the downside risk and stay safe in the process of buying dozens of homes for less than $70K each.<\/span><\/p>\n

5 Ways to Protect Yourself When Buying Cheap Real Estate<\/h2>\n

1. Choose the right location.<\/h3>\n

Lots of cheap real estate exists in the U.S. However, much of it may not be worth a lot. It may not be worth much for a couple hundred years, if ever. The key to success is buying in good locations that have demand and good fundamentals. We’ve all heard it over and over\u2014location, location, location.<\/span><\/p>\n

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Related:<\/strong> Investing in Cheap Real Estate: Is a $30,000 House Necessarily a \u201cPig\u201d?<\/a><\/em><\/p>\n

2. Buy title insurance.<\/h3>\n

Getting a buyer\u2019s title insurance policy is important. This is especially true when buying cheap homes from auction or homes that are in distress. Often, agents and auctioneers try to wipe their hands of any liability, which is completely understandable. Still,\u00a0these properties can have the most title issues. Get covered with insurance.<\/span><\/p>\n

3. Make smart offers.<\/h3>\n

I\u2019ve bought auction properties sight unseen, as well as out-of-area properties. I\u2019ve stayed profitable by pricing my offers right. It doesn\u2019t matter if you are bidding on a $2MM home in L.A. or a $30K home in Indianapolis. The key is buying undervalued property and locking in profit from the beginning. We\u2019ve all heard it time and time again\u2014you make your money when you buy. <\/span><\/p>\n

4. Get good inspections.<\/h3>\n

Where many investors fail is buying “cheap” homes and then finding out they may have to put in several times the purchase price in renovations, repairs, or even tearing down parts of the property and rebuilding. Always get inspections done unless you\u2019re very experienced with rehab numbers.<\/span><\/p>\n

\"real<\/p>\n

Related:<\/strong> The $30K Rental Property: How to Finance & Profit From Cheap Real Estate<\/a><\/em><\/p>\n

5. Make sure your property management is top-notch.<\/h3>\n

Many investors just aren\u2019t cut out to effectively operate lower-end properties. They don\u2019t understand the quirks, tenants, or the processes. Poor management can destroy even the best opportunities on A-class real estate. Great management can effectively turn a lemon property into lemonade. <\/span><\/p>\n

Beware of trying to manage these cheap houses from afar. It can turn into another full-time job easily.\u00a0<\/span><\/p>\n

Summary<\/h2>\n

There are attractive, low-priced properties to invest in today. Just make sure you know exactly what you are buying, price your offers right, have protections in place, and get great management. This will make all the difference between losing money and generating positive cash flow.<\/span><\/p>\n

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Do you have any “cheap” real estate in your portfolio? Any tips you’d add to this list?<\/em><\/p>\n

Be sure to leave your comments below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

In theory, “cheap” real estate sounds great\u2014but if you’re not careful, it could drain your bank account. Before you jump for these deals, protect yourself. Here’s how.<\/p>\n","protected":false},"author":12140,"featured_media":114657,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[],"class_list":["post-85938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/85938","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\/12140"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=85938"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/85938\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/114657"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=85938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=85938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=85938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}