$30,000 homes
Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes
$30,000 homes
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Real Estate Investor · Pensacola, FL · Member since 2012 · 136 posts · 83 votes
11yHey there,
I do a mix of high and low end properties and have many in my portfolio that I bought around the $25k price point. THE MOST IMPORTANT THING................ is not price point. It's not curb appeal. It's management management management management management management. If you don't have a great manager, just hang it up and forget about it. A bad manager will quickly turn those lovely proforma numbers into something unattainable and will frustrate you into sleepless nights. You'll probably give up prematurely after you feel the pain that many of us that have fired PMs know so well.
For a buy and hold I'll take a great manager with an acceptable proforma ROI on a deal over an amazing proforma ROI with a bad manager any day of the year. Looking over my data from the past 10 years, the difference in ROI I've realized is DIRECTLY correlated to the management over the property. Management is by far your weakest or strongest link.
41 Replies
- Rental Property Investor · Beverly Hills, CA · Member since 2014 · 472 posts · 272 votes11y
@Account Closed
It will be difficult to get a conventional mortgage for less than $50K, unless you can find a portfolio lender / bank / credit union that underwrites their own loans.
That said, I'd advise sharing some of the details of the $30K deal with BP so we can help you determine if it is a good deal. $30K is pretty low so you need to really be careful and understand what you are buying.
If you have some cash (25% down), I'd suggest looking at a reputable turnkey company that will also manage it for you after the purchase.
- Investor · Fort Wayne, IN · Member since 2014 · 1k+ posts · 515 votes11y
@Account Closed It depends where you are, and anywhere that has 30k house the market can change in a few blocks so you need someone who understand that market and is your boots on the ground. Typically bumping that price point to 50k gets a little more rent, but much more quality tenant. That said I usually buy my house under 30k but I am my own boots on the ground.
- Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes11y
@Joshua McGinnis
Thanks for your reply, the truth is i dont actually have any property Im looking at in particular, but have been seeing quite a few listings in both the Milwaukee and Memphis areas, two markets that ive been trying to research for that price.some of these are listed as foreclosures with extensive work needed. the thought of jumping in rather than waiting and saving had me intrigued.
- Urbana, IL · Member since 2012 · 1k+ posts · 425 votes11y
@Joshua McGinnis That's a good thing to know about the 50k basement limit. Didn't know that.
@Account Closed has done with homes under 30k. Find her podcast and use crowd funding sites like LendingTree.
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
@Account Closed Unfortunately the market you are in isn't conducive to that small a home price...which would explain why so many CA investors flip in their state and buy to hold with the profits in the Midwest..like here, in Michigan. I talk to many that are in the same boat, partner with some, wholesale to some, refer some to others. Funny though, the same house, same condition, same neighborhood, same everything out there...is only about 10-20% of the cost out here. This is why Michigan, and many other Midwest states, cash flow so well.
- Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes11y
@Steven Johnson
I'm thinking about buy and hold investing for the long term, cashing out is one of my concerns especially with a small multi as an exit strategy, but you mentioned lease options, could this be an exit?
- Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes11y
@Joe Villeneuve
Right on!
My long term goal would be just that,as I'm in the construction game and would love to develop/flip here in CA. while holding in cash flowing markets out of state. it is incredible how thing can be so diffrent state to state. in my Hollywood neighborhood you'll see homes ready for tear down that sell to investors for 1 mill.!!
- Real Estate Investor · OR · Member since 2012 · 390 posts · 133 votes11y
@Account Closed
Welcome to BP! I am originally from Southern California and when I first got into the Memphis market I was completely blown away that there were many houses in good condition to buy in the low 20's.
Yes, you can buy houses very cheaply---it may be a pretty nice little house---but the areas they are in can be a problem. I am not saying "Don't Do It!" but it would be a very good idea to do lots of research here using the handy dandy search bar. Do lots of reading on under 30k homes, turnkeys, buying homes in the hood etc.
The most important thing is to have a team in the area you want to buy. Every month I talk to people that are now sellers that bought a few years ago and paid WAY too much, even at 30k, or 15k----I am not kidding or exaggerating. It seems like when sellers see that you are from California they know they have a good chance to take advantage of you.
Now, having said all that, I do like the homes under 30k. But I also have the most wonderful people in my market that give me the straight info on anything I am considering. They keep me from making bad choices that I could later regret.
Best of Success to You
ps. take your time, don't be in a hurry and study much ---> there will always be lots of houses ;-)
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Account Closed:
@Joe Villeneuve
Right on!
My long term goal would be just that,as I'm in the construction game and would love to develop/flip here in CA. while holding in cash flowing markets out of state. it is incredible how thing can be so diffrent state to state. in my Hollywood neighborhood you'll see homes ready for tear down that sell to investors for 1 mill.!!
That's what I hear...a lot. $1M here would buy you at least 15 properties, with PM's, that would CF at least at $800-900/month.
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Joe Villeneuve:
Originally posted by @Account Closed:
@Joe Villeneuve
Right on!
My long term goal would be just that,as I'm in the construction game and would love to develop/flip here in CA. while holding in cash flowing markets out of state. it is incredible how thing can be so diffrent state to state. in my Hollywood neighborhood you'll see homes ready for tear down that sell to investors for 1 mill.!!
That's what I hear...a lot. $1M here would buy you at least 15 properties, with PM's, that would CF at least at $800-900/month.
@Ariel Muller
Take those houses above, the 15 for $1M, and refi them and you'll still be cash flowing at least $30-400/month, but you won't have any of "your" cash still in it by the end of the year...so you could do it again, and again, and...
- 11yJerry PadillaBusiness MemberLender · Rochester, NY · Member since 2014 · 3k+ posts · 1k+ votes
@Account Closed
The Cleveland OH market seems to have homes that are priced around 30k. I currently have a client that is investing in this area and has had much success. He is new to the business, but enjoys working with James Wise. I haven't worked with any clients in the other locations that you have mentioned, but I have seen other people post on investing in these areas. We currently invest locally, in Rochester NY. The homes here locally in that price range, are in areas that you don't want to walk down the street even during the day.
- Lebanon, NH · Member since 2012 · 258 posts · 87 votes11y
Hi Ariel, take a look at a lot of @Jay Hinrichs post on this topic. He is a straight shooter that doesn't mince words on the low cost Midwest & rust belt stuff. And also be careful who you listen to on this site and make sure they are unbiased (i.e they are real investors themselves and not selling anything) .
There are a lot of turn key sellers in cheap areas looking for greenhorns on BP from CA to sell properties to. Better yet, try to find someone from CA (that is not in the business of selling low cost turn key homes or is not a "shill" for a turnkey seller) that owns low cost rentals in the Midwest, and has owned them for at least 7 years. They will give you the real scoop after turning over multiple tenants, maintaining the property, etc...
- Real Estate Professional · Los Angeles, CA · Member since 2014 · 30 posts · 4 votes11y
Good stuff. I'm definitely aware of the possible war zones these homes can be found in, so I'll stay cautious and continue doing my home work.
Thank all this has been helpfull
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Rob Cee:
Hi Ariel, take a look at a lot of @Jay Hinrichs post on this topic. He is a straight shooter that doesn't mince words on the low cost Midwest & rust belt stuff. And also be careful who you listen to on this site and make sure they are unbiased (i.e they are real investors themselves and not selling anything) .
There are a lot of turn key sellers in cheap areas looking for greenhorns on BP from CA to sell properties to. Better yet, try to find someone from CA (that is not in the business of selling low cost turn key homes or is not a "shill" for a turnkey seller) that owns low cost rentals in the Midwest, and has owned them for at least 7 years. They will give you the real scoop after turning over multiple tenants, maintaining the property, etc...
...or, these "biased" people are actual investors, just like the rest, also straight shooters, who are simply more familiar with the market because they actually live in the market they are talking about...and these Turn Key Properties are exactly what they are presented as.
It could be that, just like those on BP that are not in the Midwest, these Midwest "shillers" are genuinely trying to help these new investors out. It could be, that these other markets are actually just a lot less expensive, and great opportunities...but, I could be wrong. If I am, then I guess I need to give back the my cash flow and all my deals.
- Lebanon, NH · Member since 2012 · 258 posts · 87 votes11y
Originally posted by @Account Closed:
Good stuff. I'm definitely aware of the possible war zones these homes can be found in, so I'll stay cautious and continue doing my home work.
Thank all this has been helpfull
A real seasoned long term local investor (that isn't trying to sell you properties) is fine too, but better yet if you can find an out of state investor (like yourself) who has owned for preferably 5+ years in the area you want to buy. Don't just talk to out of state investors that have just started buying a few years ago, they are still in giddy and in the "honeymoon" phase, and you won't get the real scoop.
- Toronto, Ontario · Member since 2014 · 615 posts · 172 votes11y
Take a look at Lisa Philips blog. She specializes sub 30k properties and has made great success of it...
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes11y
Keep in mind at these price points more due diligence is needed. A roof cost the same on average on a $30,000 house and a $300,000. Furnace, AC, sewer are all the same cost to replace. One wrong move here and you are upside down quick. A 30k house needing 30k and still only worth 30k when fixed up is no bueno. Mitigate those odds with massive due diligence.
There could be a host of other challenges to overcome...if you buy in the wrong area....well I won't go there but it gets real bad then. Just remember, it is the absolute opposite of LA investing....where it does not really matter if you buy in West Hollywood, Hollywood Hills, or North Hollywood you are still fine. The doable 30k stuff is hodgepodge and not so geoghraphically consistant. Giant swaths of Memphis could be a no go. Typically, this is a locals only deal and out of staters get their asses handed to them. On a positive note..good luck with your search!
- Lebanon, NH · Member since 2012 · 258 posts · 87 votes11y
Originally posted by @Joe Villeneuve:
Originally posted by @Rob Cee:
Hi Ariel, take a look at a lot of @Jay Hinrichs post on this topic. He is a straight shooter that doesn't mince words on the low cost Midwest & rust belt stuff. And also be careful who you listen to on this site and make sure they are unbiased (i.e they are real investors themselves and not selling anything) .
There are a lot of turn key sellers in cheap areas looking for greenhorns on BP from CA to sell properties to. Better yet, try to find someone from CA (that is not in the business of selling low cost turn key homes or is not a "shill" for a turnkey seller) that owns low cost rentals in the Midwest, and has owned them for at least 7 years. They will give you the real scoop after turning over multiple tenants, maintaining the property, etc...
...or, these "biased" people are actual investors, just like the rest, also straight shooters, who are simply more familiar with the market because they actually live in the market they are talking about...and these Turn Key Properties are exactly what they are presented as.
It could be that, just like those on BP that are not in the Midwest, these Midwest "shillers" are genuinely trying to help these new investors out. It could be, that these other markets are actually just a lot less expensive, and great opportunities...but, I could be wrong. If I am, then I guess I need to give back the my cash flow and all my deals.
Joe I am sure you have great advice. All I am saying to the OP is make sure you get 2nd and 3rd opinions from landlords (with no vested interest in the transaction) that are in the position you will be in....i.e. they are out of state investors who own low cost rental houses thousands of miles away from where they live. And make sure they have owned them for a long time, and then the OP will get a much better idea of what he is getting into.
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Rob Cee:
Originally posted by @Joe Villeneuve:
Originally posted by @Rob Cee:
Hi Ariel, take a look at a lot of @Jay Hinrichs post on this topic. He is a straight shooter that doesn't mince words on the low cost Midwest & rust belt stuff. And also be careful who you listen to on this site and make sure they are unbiased (i.e they are real investors themselves and not selling anything) .
There are a lot of turn key sellers in cheap areas looking for greenhorns on BP from CA to sell properties to. Better yet, try to find someone from CA (that is not in the business of selling low cost turn key homes or is not a "shill" for a turnkey seller) that owns low cost rentals in the Midwest, and has owned them for at least 7 years. They will give you the real scoop after turning over multiple tenants, maintaining the property, etc...
...or, these "biased" people are actual investors, just like the rest, also straight shooters, who are simply more familiar with the market because they actually live in the market they are talking about...and these Turn Key Properties are exactly what they are presented as.
It could be that, just like those on BP that are not in the Midwest, these Midwest "shillers" are genuinely trying to help these new investors out. It could be, that these other markets are actually just a lot less expensive, and great opportunities...but, I could be wrong. If I am, then I guess I need to give back the my cash flow and all my deals.
Joe I am sure you have great advice. All I am saying to the OP is make sure you get 2nd and 3rd opinions from landlords (with no vested interest in the transaction) that are in the position you will be in....i.e. they are out of state investors who own low cost rental houses thousands of miles away from where they live. And make sure they have owned them for a long time, and then the OP will get a much better idea of what he is getting into.
I definitely agree with you there...and it works both ways. Whenever anyone invests outside of their "comfort zone", or their zip code, they really need to get a good handle on it. Talking with other investors, that are also outside of the area the investor is thinking of investing in, should be a requirement, but they can sometimes be newbies them selves in that area. I would consider anyone that has been investing for less than 5 years in an area outside of their own, to be a newbie to that area.
It is probably more important to talk to someone that lives in the area out of state that the investor is looking to invest in. Boots on the ground can be a great tool.
- Lebanon, NH · Member since 2012 · 258 posts · 87 votes11y
Originally posted by @Joe Villeneuve:
Originally posted by @Rob Cee:
Originally posted by @Joe Villeneuve:
It is probably more important to talk to someone that lives in the area out of state that the investor is looking to invest in. Boots on the ground can be a great tool.
Agreed. And even better if that person with boots on the ground has no vested interest in the transaction.
- 11yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Originally posted by @Rob Cee:
Originally posted by @Joe Villeneuve:
Originally posted by @Rob Cee:
Originally posted by @Joe Villeneuve:
It is probably more important to talk to someone that lives in the area out of state that the investor is looking to invest in. Boots on the ground can be a great tool.
Agreed. And even better if that person with boots on the ground has no vested interest in the transaction.
I know what you're saying, but don't you think that there is actually less risk, and more credibility if the Boots on the ground has a stake in it?
- 11yDawn AnastasiPro MemberRental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
Originally posted by @Steven Johnson:
Check out what @Dawn Anastasi has done with homes under 30k. Find her podcast and use crowd funding sites like LendingTree.
It's actually "Lending Club". Another peer-to-peer (P2P) lending site is Prosper.com. The podcast is Show 29 in case you want to listen to it.
- Los Angeles, CA · Member since 2014 · 17 posts · 4 votes11y
Hi Ariel,
I'm also from LA and was frustrated by the high prices in the city and looked out of State. I've explored a few options including Memphis, Kansas, Milwaukee, Ohio, AZ, NV, ect...
If you decide you want to stay closer to home the Inland Empire could be an option for you as well.
Based on what some fellow BP members have shared I'd personally avoid the Turnkey route. I think if you find a good outfit you can definitely make money and they will make your life a lot easier, as well as save you time. That said if you put in the work and establish a solid team on the ground I don't think it's necessary to use a Turnkey provider. I am actually in the process of putting together a team of people myself in hopes of cracking the Milwaukee market in the next couple of months.
If you PM me maybe we can jump on a call or grab lunch and help each other through the beginning phases of the process.
Good luck !
- Kansas City MO · Member since 2014 · 357 posts · 349 votes11y
I read on a BP forum that aimloan.com will do loans as low as 25K with good rates. I've never tried them to know their service or if they still have this minimum.
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