Investor · Draper, UT · Member since 2015 · 193 posts · 48 votes
11y
We typically purchase the lower prices properties. We enjoy these cheaper properties, because the cap rates are typically higher. You do have to be more cautious about the areas you get into. I would only recommend getting into those properties if you have people you trust in those area, or you are a local investor that can handle issues that arise with those properties yourself.
Real Estate Agent · New York, NY · Member since 2015 · 31 posts · 13 votes
11y
buying a 50K property in a some States (Kansas) might mean a A- area while a 50K property in (New York City) might mean a C+ area. So if you buying a cheap property (bad neigborhood) in an expensive area, i would suggest hiring a property manager to take care of the hassle. With the higher cap rate, you could always afford to have one. In this case, you are swifting resources to work for your own benefits.
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
11y
relative cost makes a HUGE difference here. As others have mentioned a 50k property may cashflow well and be a decent house in a decent neighborhood....OR it could be the house that jack built in a slum and may or may not cashflow.
The unfortunate answer to your question is that it's market dependent (imo). 50k where I live will get you a decent house in a B area that hits 1.6-1.75% rule. Other areas could be better, or could be significantly worse. You have to decide what factors are most important to you, and adjust what deals you look for based on that.
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
11y
@Chance CooperI would not recommend cheap properties unless you already have a significant sized portfolio of higher end properties and you are local. Cheap properties are, by their nature much more risky. Think of it as stock. If you didn't own any other stock, would you buy a highly speculative, risky stock? Probably not. But if you already had a large stock portfolio, you might want to add shares of some more speculative stocks. Real estate should be treated the same way as other asset classes in my opinion. Cheap properties are speculative. You hoe that you get the high returns reflected on a pro forma, but the returns are often lower that more expensive properties due to high vacancies and turn over costs. I talked about this topic on my radio show which you can find on my website.
Real Estate Agent · New York, NY · Member since 2015 · 31 posts · 13 votes
11y
Hey Charles, I was just trying to make a point before. However, i know some areas 15 mins drive from Manhattan that are cheap. There are some in New Jersey (Newark, Greenville - Jersey City, etc) has properties selling less than 100K. They are cheap but i would consider those in a C-/D neighborhood.