New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
New to investing and trying to fully create a 10 year vision or business plan. Currently I plan to save 2k a month. To increase the amount of units I can purchase and cash flow I want to stick with property under 100k. My question is do you think we will continue to have these sort of properties 6-10 years from now or should I start off assuming a higher amount?
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Darius White nobody is giving you the right answer, which is "why does it matter?" Houses could cost $8000 or they could cost $500,000 and that alone doesn't mean they are a good investment. What makes one investment better than another is the cash return. Think of it as if you spend $1 today, how many dollars will that return in future years? The more dollars it returns, the better. Home value appreciation in a given market is mostly determined by supply and demand. The leading factor in demand is jobs, not only quantity but average pay of jobs. Supply is often driven by demand, but supply can run into barriers. For example if you live on an island, there is limited supply of land which drives values higher even if demand is average.
I hope that makes sense. My point is look for a good investment, not a cheap property. Look for markets that have stable and growing employment, because those are the markets that will have steady rental opportunity.
Investor · Member since 2020 · 324 posts · 278 votes
6y
In some areas yes...I'm always impressed that we have properties under $100k still today. So yes we probably will, but over time you may decide you want some nicer properties/areas. So yes, but also for planning purposes, it couldn't hurt to raise the bar a bit.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Why do you think that? My parents home in Detroit cost them $8k...in the 40's...the 1940's. It took how long to get where that same property cost $40k today? The specific markets where each house is located will dictate the cost of that property. It does now, it did in the 40's, and it will do the same thing in the future...and there will always be $100k properties...at least for the next 5 years.
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Cameron Tope it does help thanks... like I said I’m new.. but I’m learning rapidly.. I see many topics about thinking about your long term investment strategies.. can you give me an example of what you mean? How many units I want? Or how much income I am hoping to create? What strategies have you seen?
Rock Hill, SC · Member since 2015 · 104 posts · 209 votes
6y
@Darius White
Josh Dorkin would probably tell you there are $500 properties in Detroit but you might not want to invest in those. If they are $500 now, what makes you think they will be over $100k in a few years? There is a reason they are so cheap.
Rental Property Investor · Shelby Twp, MI · Member since 2014 · 47 posts · 20 votes
6y
Just keep saving what you can while you are figuring out your plan. Start with then end result (many start with covering fixed expenses), and then move to realistic profits, and property type and develop a plan on what your business will look like in 6-10 years. Once you have this defined, then you will start analyzing markets. When your plan, market, and finances intersect, you will be in a great place to to jump on a deal. This process will determine the property price range. Do not let a property price determine your business plan.
A lot can change in a few years and it is dependent on local markets. I know areas where house prices went from $235K to $350K in a couple of years-these are the less expensive homes. Other areas, prices haven't changed in 10 years.
Save what you can and when you have enough to buy a house, buy one where the numbers work for you.
Investor · Member since 2017 · 15 posts · 35 votes
6y
Hey Darius
You are on the right track! making a plan is key. It is essential to figure out where you want to be in your investing goals and your future. Often we get scattered chasing shiny obkects and loose sight of our goal, It starts to cloud the water. Cameron said it right, you need to reverse engineer your goals. Your question ...Will there be The 100k properties in 6-10 year? who knows? yes more than likely. However It will boil down to your strategy and your clientele. You might find that even if there were lots of 100k houses, you might not want anything to do any of them.
Once you've done your homework, aim... fire.... refocus.. the plan will likely change along the way.
@Cameron Tope it does help thanks... like I said I’m new.. but I’m learning rapidly.. I see many topics about thinking about your long term investment strategies.. can you give me an example of what you mean? How many units I want? Or how much income I am hoping to create? What strategies have you seen?
You're on the right track! You can ask yourself the following questions:
Do you want to work in RE full time or part time?
How much money do you want to make a month/year?
Do you want to make more money now or build wealth?
When do you want to retire?
Does real estate fit into your retirement strategy? If so, then how much of your portfolio should be real estate?
Those questions should give you a good starting place on where, what and how to invest in real estate.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Darius White nobody is giving you the right answer, which is "why does it matter?" Houses could cost $8000 or they could cost $500,000 and that alone doesn't mean they are a good investment. What makes one investment better than another is the cash return. Think of it as if you spend $1 today, how many dollars will that return in future years? The more dollars it returns, the better. Home value appreciation in a given market is mostly determined by supply and demand. The leading factor in demand is jobs, not only quantity but average pay of jobs. Supply is often driven by demand, but supply can run into barriers. For example if you live on an island, there is limited supply of land which drives values higher even if demand is average.
I hope that makes sense. My point is look for a good investment, not a cheap property. Look for markets that have stable and growing employment, because those are the markets that will have steady rental opportunity.
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Tom Scott very true.. that’s what I tell my wife.. have to be focused but flexible in our approach. We’re definitely trying to see the end goal or at least plot out a 10 year big goal
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Joe Splitrock yes I think I get it.. I guess I was focusing more on the leverage of amount of homes I could get with the price target of 100k vs a 500k price target as u mention to grow quicker... but with the cash on return would this be a huge facet or?
I'd suggest looking into hard money lenders. If you're careful, bridge loans can help you get into a deal you wouldn't otherwise be able to get into. You'll eat into your profit, but that's the price of getting started. Good luck!
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Adam Engle-Sorrell thanks.. but with 20k I should qualify for more traditional loans if price is 100k.. your suggesting hard money if I don’t have a lot saved up correct?
Correct, to help you get in sooner or to be able to do better deals with 20k saved. Even if you don't think it's necessary, hard money is a good tool to at least know about if you have years before your first deal.