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.
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.
Not true at all. Just as you can have cash flow without appreciation you can have appreciation and no cash flow. It works both ways and the price of the house has nothing to do with it. And the price of the house often has nothing to do with the quality. I have houses that I bought for next to nothing due to divorce situations, etc, and they are nice and I charged top dollar for our area.
But I BRRR and take advantage of ARV, a small appreciation AND killer cash flow. I'm ok with a house not appreciating quickly...but it cash flows almost $500 a month. And when it's paid off by the tenant...I still own a $100k house with absolutely zero cash invested. I guess it depends on your strategy and time line
Cheap does not mean cheap. It’s about the deal and management.