The $30k rental club.......

306 Replies

@James Galla ah the classic pro forma I’m holier than thou negative predictable reply.....yawn

Originally posted by @Stuart Smith :

@James Galla ah the classic pro forma I’m holier than thou negative predictable reply.....yawn

 Haha ok. I don't think I worded it like that, but if I raised some doubts, that's good. You'll be more careful when looking.

But, if you're looking to be condescending, I'll suggest making it the $10k club - head right on over to South Akron, West Hill, or Sherbondy Hills in Akron, and just dump your $100k into 10 properties. You'll be rich in no time.

@James Galla

The clue is in the title....which word didn’t you understand ?

You did word it “like that”.....and you know you did

This is clearly not for you......I’m sure there are other threads where you can attempt to talk down to folk, but it won’t wash with me....

Originally posted by @Stuart Smith :

@James Galla

The clue is in the title....which word didn’t you understand ?

You did word it “like that”.....and you know you did

This is clearly not for you......I’m sure there are other threads where you can attempt to talk down to folk, but it won’t wash with me....

Nah, you clearly asked for insight, specifically, "any" insight, so I gave you mine. By the way, I'm in the $30k club. If you want me to talk up your idea, it's just not going to happen. Plenty of people fail in real estate doing things correctly. There is no need to hype up an idea that doesn't actually work. Take a look at a couple REITs or other kinds of portfolios and you'll see that they aren't comprised of low tier, high risk, properties. If you're going to syndicate a portfolio, you ought to place the money where you won't lose it in a short period of time.

Originally posted by @Caleb Heimsoth :

@Stuart Smith. Sure this can work but I would be very careful with using a lot of leverage and only do this if you’re local.

I would tend to  agree  this . I have no idea how it could be done successfully from out of state . You gotta be local to manage These . It’s very hands on and not for everybody or the guy who wants more free time. It’s another job but one that pays well if ran correctly . I grew up poor . We rented a house for 200$ a month and we were on food stamps so i understand this environment well . 

@James Galla thank you so much for your wisdom and guidance.....I’m sure you will find a home for your negativity somewhere, but it won’t be required here, thanks all the same

@Dennis M. Yes this seems to be regarded as a big issue when buying out of state...

I’m not a plumber or electrician, if I have a problem with my own home , I call one and they come to fix the boiler or fuse box , I watch them

I’m still not a plumber or electrician.....

If I call one in another town and they do the job , the only difference is I wasn’t watching over them, is that such a big deal , bearing in mind I have no idea what they are doing ?

Yes it’s open to abuse , potentially, the price might be bumped up, but not by a crippling amount, and how many times a year is this going to happen anyway , not many.

I’ve read and taken in hundreds of long articles written by well informed and experienced folk regarding the pitfalls of investing in low cost properties, pages and pages of the stuff !, and after a while this convinced me that putting $20k into a $100k property was the way to go, a far better bet, a more prudent, safer, better planned investment, reading changed my outlook and approach to investing in real estate , and my plans.

And then, a genuinely wise and evidently experienced guy wrote one line.....

“ I won’t but anything that doesn’t pay for itself within 2 years “

.......And I’m straight back to my instincts, MY experience in buying and renting low price properties in rougher areas with salt of the earth tenants......I made money and I learnt how to handle situations and problems , people from all walks of life, and I enjoyed it !

So that’s where I’m at mentally , the low stake money / high return market

That’s what this thread is about, there are millions of other threads about why not to do it, copy and paste wisdom, vapid negative repetitive nay sayers.....I don’t need any more with nothing new to say, the skull and crossbones dont phase me....

@Ashley Hamilton I really needed to read this. I was wondering if anyone else had gone through this before. I currently have 2 properties under contract each less than 20k. The rent would bring me $800+ a door. HML are requiring a minimum of $50-75k purchase price. I'm having to really be creative and think outside of the box to get these deals closed.

I can...I will! Thanks for sharing.

@Chris Heeren do you pay cash for your homes or do you have mortgages, I’m glad I saw these post because I have two 30k homes and wanted to buy more but as previously said I didn’t think I would be able to get to leverage the equity out of it.

@Stuart Smith I've been actively seeking house like this in Cleveland for 6 months now and I am still getting out big by cash buyers. Any advice on how to win over the sellers with my offers?

Sorry I can’t advise, no experience in this area, but surely you’re a cash buyer yourself at these prices ? 

Originally posted by @Stuart Smith :

Im sure many of us have read all the warnings and reviews of buying low price properties, and the problems typically associated with them, but all that considered, it is what first attracts a lot of people , indeed this is the only path available to some, its a start, so lets explore whats real and possible.........

lets use Detroit, Cleveland, Michigan and Indianapolis as examples where possible ,and set a ceiling of $30k

Personally i dont see the return on higher priced properties attractive enough to invest $80 to $120k plus, and before anyone starts preaching about the pitfalls, ive done this before, over 30 properties over 20 years, just in another country, low cost houses in deprived areas, i know what can go wrong.

The first attraction here is the low cost, funding with personal loans and credit cards etc,  is possible, and with high returns , quickly repaid, whereas a large mortgage is on your credit file for years, and has to impact further borrowing, and cannot easily be cleared temporarily in the same way credit cards can, if your credit needs a boost !

How easy is it to get a portfolio of say 3 x $30k properties you own outright (wherever the funds came from !) and then refinance into one loan after 6 months or a year ?........and then repeat this process ?

This is more attainable for a lot of people surely ?

So, anyone with a similar train of thought ?, anyone already doing this ?, any input would help........

 I am a sub $30K investor.  In fact, I may soon end up buying a historic downtown commercial building for less than $30K if things go right.  I don't worry about investors who shout doom and gloom at this particular category of properties.  It reminds me of the general non-investing people who warn against the risks of RE investment in general.  Both parties shout warnings about something they know little about and fear more than a little.  I listen politely, do my own research, measure my own capabilities, and make my own decisions.

I went looking for loans last year and I discovered that while it is tricky to find lenders who will loan on properties that appraise for less than $100K, it is easier to find lenders who might loan on a portfolio of properties that total that amount.  Some were more amenable if the properties were located close to each other, or even next door to each other.  But there are options.


Good luck.

@Randy E. That’s the kind of info we need, it’s clearly a stumbling block , but obviously can be achieved with the right bank

As someone said earlier, it has to be considered that should you want to sell one property down the line, that may cause complications but that’s......a problem for another day !

Originally posted by @Stuart Smith :

Sorry I can’t advise, no experience in this area, but surely you’re a cash buyer yourself at these prices ? 

 For me, yes, the properties are purchased as a cash purchase.  The problem comes when it's time to invest again and I'm faced with waiting until I save enough to buy again (which, depending on how life expenses are going could be a reasonable time or a long time) or trying to leverage my equity to grow my business more rapidly.

At this price point, getting another unit creating an additional $800-$1K/month means I will be able to pay off a $30K loan a lot quicker than waiting to save $30K without that.  And that allows me to get the next property quicker, and so on and so on.  I've done the math countless times over the years.  Getting easy access to equity loans would allow me to acquire 30 more houses in a few years than saving for each, one at a time.  And that would allow for much more rapid growth after that.  And all along, the houses would be getting paid off at a rapid rate.  It's truly a chicken-egg dilemma.  

Originally posted by @Stuart Smith :

@Randy E. That’s the kind of info we need, it’s clearly a stumbling block , but obviously can be achieved with the right bank

As someone said earlier, it has to be considered that should you want to sell one property down the line, that may cause complications but that’s......a problem for another day !

 I worried about that also.  Like you, I'll worry about that if the day ever comes that I want to sell something.

Fortunately for me, a house that I bought+rehabbed for an all-in of $22K three years earlier appraised at over $100K last year and I was able to take out an equity loan on that one alone.  It was a precarious process, because the appraiser wasn't paying attention to the local market enough and didn't know about sales over the past year.  Strange, I know, because that's his job.  But in the end, it worked out.

@Randy E. It seems a separate section specifically for potential sources of finance for both low value individual properties and portfolios of the same would be very useful to a lot of people....

Originally posted by @Gus Kazek :
@Stuart Smith I've been actively seeking house like this in Cleveland for 6 months now and I am still getting out big by cash buyers. Any advice on how to win over the sellers with my offers?

 Spend more $$$

Originally posted by @Stuart Smith :

@Ashley Hamilton

What about starting “The $30k Club”....

10 investors @ $10k

The club buys 3 $30k properties, the $10k left is to cover expenses

Entry criteria

Little or zero experience in real estate

$10k must be a considerable amount of money to them

 @stuart smith yes I'm down with this

Originally posted by @James Galla :
Originally posted by @Stuart Smith:

@James Galla ah the classic pro forma I’m holier than thou negative predictable reply.....yawn

 Haha ok. I don't think I worded it like that, but if I raised some doubts, that's good. You'll be more careful when looking.

But, if you're looking to be condescending, I'll suggest making it the $10k club - head right on over to South Akron, West Hill, or Sherbondy Hills in Akron, and just dump your $100k into 10 properties. You'll be rich in no time.

 Add East Cleveland to your list as well...properties so cheap they're giving em' away! Haha

For newer investors looking to get started, I would second the notion for caution. Cheap houses in areas that aren't the ghetto are few and far between and they need a lot of work to get the property cleaned up enough to attract and keep a good tenant that won't keep you up all night. Every week I'm approached by out of state investors who want a piece of the action. You have to know where to buy and you better be willing to work. Cleveland is still a blue collar town and when a true diamond in the rough hits the market, you will be competing against dozens of native Clevelander's with rolled up sleeves who know what it's like to work the trenches. That being said, it's done all the time. I know because I polished up a few of the diamonds and still own them. But do your homework. Know the areas. Use caution.

Yes yes we know......

You can’t polish a turd, but you can roll it in glitter......

Originally posted by @Ashley Hamilton :
Originally posted by @Stuart Smith:

Im sure many of us have read all the warnings and reviews of buying low price properties, and the problems typically associated with them, but all that considered, it is what first attracts a lot of people , indeed this is the only path available to some, its a start, so lets explore whats real and possible.........

lets use Detroit, Cleveland, Michigan and Indianapolis as examples where possible ,and set a ceiling of $30k

Personally i dont see the return on higher priced properties attractive enough to invest $80 to $120k plus, and before anyone starts preaching about the pitfalls, ive done this before, over 30 properties over 20 years, just in another country, low cost houses in deprived areas, i know what can go wrong.

The first attraction here is the low cost, funding with personal loans and credit cards etc,  is possible, and with high returns , quickly repaid, whereas a large mortgage is on your credit file for years, and has to impact further borrowing, and cannot easily be cleared temporarily in the same way credit cards can, if your credit needs a boost !

How easy is it to get a portfolio of say 3 x $30k properties you own outright (wherever the funds came from !) and then refinance into one loan after 6 months or a year ?........and then repeat this process ?

This is more attainable for a lot of people surely ?

So, anyone with a similar train of thought ?, anyone already doing this ?, any input would help........

Hello, yes I've done this in Detroit for 9 years now and some properties were purchased for $1000.  At this point I own 9 properties (10 door) free in clear in Detroit. All occupied, making around $7100 per month. I've already made my initial investment back on almost all the properties and am now seeking a blanket loan on my portfolio. My guess is the total value of the properties as a whole today are $469k. So at 32 years old I owe $469k worth of real estate. But the good news is if the market go up next month or next year I could be worth $600k, then next year maybe $1 million. And i'm confident that the market will go up because it's already hit rock bottom so there's nowhere to go but up from here. Also there's a lot of big investment going on in the city now. I am currently look to purchase a condo in Vegas as well and hopefully moving down there soon. Thanks for you post!!! We need more opened minded people on here that can appeal to the masses without a ton of money.

Ashley...DAMN!     Outstanding portfolio!!!     Well done, and I hope you triple your doors in the next 10 years girl!!  Kudos!

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