Will there be 100k properties in 10 years?

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?

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Joe SplitrockPro Member

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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

@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.

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Marco PadillaPro Member
Investor · Philadelphia, PA · Member since 2017 · 100 posts · 50 votes
6y
@Darius White
Remember there will always be properties under $100k the most important thing to remember is everything goes in cycles. What goes up must come down and what goes down must come up. Yeah I’m some areas the properties which are cheap are only going to be cheap for so long and then they’re going to go back up and in some areas where the properties are expensive the market is going to go down. If there’s anything history has taught us is that everything repeats itself. Good luck and make sure to do your homework regardless of where you begin your investment career.
[email protected]215-999-3005
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Heath Jones
Rental Property Investor · Enterprise, AL · Member since 2019 · 137 posts · 85 votes
6y
@Darius White Are you trying to buy a property outright in 6 years saving 2k/month? That is waiting a long time to start REI. That's 6 years that your money isn't doing anything but gathering dust and loosing value.
If you are saving 24k per year, you could potentially buy one property a year for 6 years using the saved money as a down payment for each one. What is your goal and reverse-engineer what it will take to get there.
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Pace Jordan MorbyPro Member
Investor · Tempe, AZ · Member since 2016 · 20 posts · 50 votes
6y
A lot of the homes I am buying, we take over existing mortgages on them. Meaning I do not have to qualify or put a lot of money down. They all cashflow and these deals are EVERYWHERE. Our average purchase is 150,000
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Darius White
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New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Heath Jones true.. definitely not wait.. goal is to continue working and buy at least 1 house per year for 3 years then reinvest all cash flow to start purchasing more than 1 property per year thereafter (after year 3 able to purchase multiple properties each year or duplexes)
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Heath Jones
Rental Property Investor · Enterprise, AL · Member since 2019 · 137 posts · 85 votes
6y
@Darius White You could start with multifamily. My wife and I’s first property was a 4 unit and our second was a 16 unit. While we had enough to buy the fourplex, we bought the 16 unit using other people’s money and within 5 years (or less!), the income from the property will pay back everyone who loaned us money.
I think multifamily is the way to go, check out “The Multifamily Real Estate Experiment Podcast” (on iTunes and Spotify) and learn more about how it is not as challenging to buy bigger properties as people think it is. There is absolutely no reason not to go bigger as soon as possible!
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Jason Hartman
Rental Property Investor · Scottsdale, AZ · Member since 2012 · 314 posts · 146 votes
6y
Thanks @Evan Bradley - Glad you're enjoying my Creating Wealth podcast!
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Iven Stevenson
Rental Property Investor · Oklahoma City, OK · Member since 2018 · 34 posts · 24 votes
6y
@Darius White stay the course my man. There will always be 100k properties that cash flow when bought correctly. Remember markets change so does our plans.
Cheers!
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Ryan Avila
Rental Property Investor · Napa, CA · Member since 2016 · 69 posts · 75 votes
6y
Originally posted by @Darius White:
@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?

Why do you want to grow your number of units so quickly?
Look at it like this;
Four (4) properties - $400/each = $1600/month cash flow
One (1) property - $1600/month cash flow
What’s the difference?
Four properties with expenses verse one property with expenses, I.e. four roofs, four HVAC, etc.
Something else that jumps out is four tenants vs one tenant. Especially at a time like this, with tenents not being able to pay rent. Would you rather worry about one person potentially not paying or four people potentially not paying? The fewer the tenants the fewer the headaches. And don’t just think, we’ll we will put PM in place, because at that point you go from managing the tenants to managing the property manager and their expenses.
Just keep in mind that passive real estate income isn't passive most the time, especially for buy and hold investors. For truly passive income your gunna be looking at syndicates, REIT's and index funds.
Hope this helps!

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Darius White
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New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Ryan Avila I get you in principle as far as if the cash flow is the sake it doesn’t matter.. But do you mean having one tenant period or one house (as in 1 duplex or 4plex)?.. because if your cash flowing 1600 on 1 house with 1 tenant.. how much are you charging in rent? California may be different but I don’t see this in Midwest or southeast markets where I’m looking.. and most areas where prices are like that, I find more buyers than renters..
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Stone Saathoff
Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
6y
For those towns right now that have houses available for under 30K on a regular basis, I'm sure they will still have properties available under 100K 10 years from now. In my local market of San Antonio, Texas I doubt we will have many properties available under 100K in 10 years, but for other parts of the US, certainly.
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Jimmy O'Connor
Real Estate Agent · Philadelphia, PA · Member since 2018 · 428 posts · 484 votes
6y
@Darius White a good place to start your research is in your City/County's 20-year comprehensive plan. This is usually a good indicator of where and how the city is planning on pouring money. The terms are usually pretty general but it will at least give you an idea to the path of progress. If available, I would also look to where permits are being pulled in your city and how that progression has looked over the last 5-10 years relative as well as the increase in sale values. Most major cities have open data policies that you should be able to access. It looks like Detroit Building Permits Data- CSV's and API's are very investor-friendly and has a ton of info but it looks like the data is limited to just the last year.

To piggy back of what @Ian Walsh stated earlier about Kensington- just a year or two ago I used to easily to be able to pick up two-story row homes shells by Lehigh and Frankford Ave (for those not local, those are two very hard boundaries in the city) for 50-60k, now shells are easily over 115k in this same pocket. Similar story with Grays Ferry. These pockets, for the longest time, used to be a no-fly zone for investors. There is no neighborhood that is immune to appreciation.

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Marci Stein
Rental Property Investor · New York, NY · Member since 2011 · 956 posts · 510 votes
6y
Absolutely. There’s always areas that are impoverished and don’t appreciate.
For example I bought a house 10 years ago in Sullivan county New York for $80,000 and it’s worth the same exact thing today , if not less .
however , it cash flows very nicely . I’ve had it rented out for $1200 a month for 10 years so I’ve enjoyed a nice cash flow. makes up for the lack of appreciation.
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Darius White
OP
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Marci Stein thanks Marci!
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Christopher DerrPro Member
Investor · Garner, IA · Member since 2013 · 70 posts · 36 votes
6y
All day long where I live there will be. I'm still buying houses for $20k
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Tyrone Townsend
Wholesaler · Foley, AL · Member since 2016 · 5 posts · 0 votes
6y
@Cameron Tope that is dope advise!
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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Darius White if you have a BiggerPockets PRO membership you can get free access to every state lease and forms. Keep in mind that a lease is only one of several forms you need. The BiggerPockets package has inspection forms, pet forms, application, etc.
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Ellis San Jose
Specialist · Westlake Village, CA · Member since 2010 · 1k+ posts · 781 votes
6y
A question you may want to ask is that even if there are $100k properties in 10 years with the appreciation out run the maintenance & actual capital expenses on those properties. A roof on a 1000 sqft property on a $100k house isn't that much different than the cost of a roof on a 1000 sqft $300k house.
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Steven Lowe
Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
6y
I think there will be. I have two main reasons for believing this.

1) Some markets have relatively flat appreciation and depreciation cycles. Prices today in these areas are much the same as they were in 2010. So it stands to reason that in areas where current values are around the $100K mark today they should be similar in 2030.

2) Areas with more exaggerated A/D cycles which fall between 100K at the peak cycle value and 100K on the bottom of the cycle value should at some point be valued in this range. So it's possible we could at some point in the next market cycle 10 years from now see values range from 100K or less in some and 100K or more in others.  Just not sure if that will coincide with your 10 years from now timeline.
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Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 716 posts · 555 votes
6y
I think there will be in certain areas. Your goal of saving is a great start and over time if you keep building your knowledge you might find you have more options to do deals with less. Having the money saved will help open these options so start saving and keep learning. If you can afford to save more do it, again you are just opening more options for yourself.
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Samantha P.
Real Estate Investor · Glenwood, IL · Member since 2015 · 84 posts · 22 votes
6y
@Darius White
It depends on the market you are trying to invest in in ten years and what your strategy is at that time. You may be able to find a Single family home or a duplex for that price that needs a little work in some areas. If you are into rehabbing, you will be fine. If your strategy is turnkey properties to buy rent out then it nay be slim pickings in nicer areas.
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Darius White
OP
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Samantha P. Thanks Samantha.. yes I was originally thinking if turnkeys but quickly changed that plan. I was to start with sfh with good cash flow then eventually move to multifamily
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Samantha P.
Real Estate Investor · Glenwood, IL · Member since 2015 · 84 posts · 22 votes
6y
@Darius White
Oh ok good plan. I'm sure you will find something. Just stay focused and keep analyzing deals until you find a good one.
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Ron Flatt
Investor · Hillsboro, TX · Member since 2017 · 358 posts · 245 votes
6y
Depends on your area. In the NE and Coastal regions, the prices will be higher, but in other communities, 100-200k is the upper end, for the masses.
None of my rentals are 100k, but they cash flow, they stay rented, and they are appreciating. The key is return on investment. My flips are in between the 100=200ks but my rentals are usually under $50K. I was at the 2% rule up until last year. I rolled it back to 1.5% for my purchases.
Depending on the next few months, I may go back to the 2% rule on my new purchases. It makes properties cash flow, as well gives room for appreciation.
You may not be able to find it in your town, but usually within a 15-20 mile radius you can find what you want. My radius is 30 miles, and I have took out one city in that area because properties I have owned there were hard to keep rented.
The Main thing is get started and adjust as your finances and the economy dictates. This little scare will cause some to over analyze and never do anything. Others will jump in the deep end without knowing how to swim. Find a deal, analyze it, if unsure run it past someone else you trust (in the business). Remember it is your investment and your choice. If someone gives you the go ahead and you do it, it is still on you.
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Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
6y
Originally posted by @Darius White:
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?

There are properties that were worth $50K in the midwest in 1970 that are worth $60K today. Not even close to just keeping up with inflation. Many will be happy to sell them to you today. These properties are NOT profitable. Cheap is cheap for a reason.
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Darius White
OP
New to Real Estate · Detroit, MI · Member since 2019 · 41 posts · 21 votes
6y
@Andrey Y. They do not appreciate but have they been cash flowing that long? Midwest is one of the best places to find steady renters due to some areas having more renters than buyers.. don’t think you can solely look at appreciation
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