Is This Possible!?!? 30K~35K Properties W/$250$350.00+ Cash Flow?

Buying & Selling Real Estate
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Is This Possible!?!? 30K~35K Properties W/$250$350.00+ Cash Flow?

Daniel F. Harb
ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes

Question :

I am still fairly new to BiggerPockets (2+ months) and I am gearing up to start investing OOS. I am searching in 4 different States and trying hard to do heavy due diligence. I am seeing here and there properties that are said to be selling from the $29K range up to the $40K amount that are stating that after ALL expenses there will be a $250.00, $300.00, or $350.00 positive cash flow. This sounds pretty incredible, of course.

IS THIS POSSIBLE?

Still being new, I am just humbly asking from all members and experts if this seems "Pie in the Sky" numbers for me, or if I am missing something? I would love to purchase properties like this all day long, but being new, and especially living in Orange County, California, I simply want to understand if these things are true, and if this is possible after all expenses, INCLUDING property management.

Thank you in advance, BiggerPocketeers, and Merry Christmas!!

Daniel F. Harb, ARRT, RT(R)

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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
8y

@Caleb Heimsoth @Katrina P. @Derrick E. my way or the highway strategy opinions are rampant on BP and their posts get voted up by the same few members who have the identical single-minded opinions.  Thanks for setting the record straight.  There are lots of ways to make profit in real estate.

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  • Eric H.
    Real Estate Solutions Provider · Baltimore, MD · Member since 2014 · 571 posts · 452 votes
    8y

    @Daniel F. Harb Greetings,

    The short to your answer is yes. The long is it's not for everyone. I would not recommend a new landlord investing out of state to pursue this strategy as it takes a clear understanding of the market that produces such returns at this price point and an even better understanding of the tenants. Can it be done from out of state? Absolutely. Just be careful, that's all.

    Peace!!

    18Reply
  • David Song
    Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes
    8y
    Money pit trap.
    2Reply
  • Katrina P.
    Investor · Randallstown, MD · Member since 2010 · 185 posts · 57 votes
    8y

    I invest in these types of properties, and they have been nothing but a positive experience for me, so please don't listen to people who speak negatively of these types of investments. It's the easiest way to get in for some, and as long as you have a good team on the ground to get things done when you need them done, it works out very well. The best place to find these investments is in the Mid-West. Happy Investing and Merry Christmas!

    16Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Thank you, @Katrina P., @David Song, and @Eric H.

    Really appreciate your input.

    Merry Christmas!

    ~Daniel F. Harb

    0Reply
  • Derrick E.
    Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
    8y

    @Daniel F. Harb This is not only possible, but these are the only places I currently invest in.

    Anywhere in the MidWest is good, but I would recommend Dayton, Ohio if you are determined to go OOS. I've never invested OOS as I live in an area where I can buy these types of homes in my back yard. I do not recommend making that kind of purchase unless you have actually visited the city and the homes in person.

    Having said all of that. There a LOT of nice homes in that price range. People screaming money pit are 100% clueless of the situation. The same house that is $30k in Dayton would be $150-$200k homes in parts of California. 

    I bought a house for $30k and didn't have to do anything to it. I put in a new hot water tank and added a railing on the stairs leading to upstairs but I did those things because I wanted to. I turned around and rented it for $800/month no problem. Had it listed for 2 days and have 4 people come look at it and 3 people wanted it!

    Feel free to reach out if you have any questions!

    17Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Wow, @Derrick E.! That is pretty incredible. You are precisely right, that same house for $30 Grand in your area, would be at $750K in Orange County, California. :)  Man, I wish those types of properties were in my back yard!! I will definitely visit the areas before I make any investment decision. 

    I will most definitely PM you, and thank you, Derek!

    Merry Christmas!

    ~Daniel F. Harb

    2Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    I bought a house like this, out of state. Bought it for 35k, Worth 40k. Rents for 750 and hopefully soon will be closer to 800. So far I haven’t had to basically do anything to it but there’s some deferred maintenance. The tenants are very nice and easy to deal with (besides being a bit hard to get a hold of). I’m not sure if I will continue to go this route in the future or not but I’m just saying that making huge generalizations about the types of tenants you get or that it’s automatically a money pit is naïve. Someone who has never been or isn’t from the Midwest can’t fathom these types of homes. I’m from the Midwest and grew up there. I’m used to it. I just don’t live in the Midwest anymore. Here’s a classic example: my brother splits an apartment with a roommate and pays 350 for his portion. His apartment is nicer then mine, even though I pay more.
    10Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    Whats a $30K house ?   Never seen one 

    3Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    8y

    @Caleb Heimsoth @Katrina P. @Derrick E. my way or the highway strategy opinions are rampant on BP and their posts get voted up by the same few members who have the identical single-minded opinions.  Thanks for setting the record straight.  There are lots of ways to make profit in real estate.

    24Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Thank you @Caleb Heimsoth, Thanks, @Mike Dymski. 

    I really appreciate the information and the time you have taken to respond. :)

    Of course, when living in California, I believe it is imperative to get as much input as possible. Then one can separate the "Wheat from the Chaff", so to speak. OOS investing seems pretty great and exciting, especially when in my area it is a "Quarter Million Dollars" for a shack. 

    Have an awesome Christmas, and best of profit in 2018!  $$$

    Daniel F. Harb

    4Reply
  • Derrick E.
    Investor · The Creek, WV · Member since 2014 · 890 posts · 1k+ votes
    8y
    Originally posted by @Matthew Paul:

    Whats a $30K house ?   Never seen one 

    The 2nd picture is where I put the railing on the stairs. BTW, the house came furnished as well. Directly across the street (to the right in the first picture) is a nice day care center! Cha Ching!

    18Reply
  • Rocky V.
    Rental Property Investor · Arlington, TX · Member since 2012 · 788 posts · 640 votes
    8y

    @Matthew Paul See pic for a $30K property located in the suburbs of Dallas/Fort Worth market.  I definitely say these are great money makers but they more then likely will not appreciate much.   I would also make sure to properly vet management company if you are investing out of state on a sub $30K home.  We have had great success with ours.  Here are the numbers on this particular deal which we finished a couple months back.

    Purchase Price $14K (cash)

    Rehab $18K (cash)

    Leased $735/month

    Taxes/Ins $150/month

    12Reply
  • Dell Schlabach
    Investor · Canton-Akron, OH · Member since 2012 · 917 posts · 477 votes
    8y
    Originally posted by @Matthew Paul:

    Whats a $30K house ?   Never seen one 

     If our area there are a lot of the 30,000 houses, most of the 20k-30k houses are bought by local landlords, or investors and as to the out of state guys for 40-60 and they try and manage them for a few years and then try and  sell them after they get fed up tryi ng to manage them from a distance, most management companies do not like to manage that price range of properties and the tenants they typically draw. 

    When they out the properties in the market a few years later, unless they can sell them to another outbid state investor they are typically stuck with selling them to the local for 20-30k .  Not a lot of return realised in this scenario ,  I have seen this repeated over and over during the past 15+ years. 

    Some people are making money in this game, mostly locals who know the neighborhoods and the schools districts well. Don't expect houses in most areas in this price range to appreciate in the next 10-20 years. More likely, if you are an out of state investor, your property will sell for less then you paid for it. The 200.00-400.00 a month cash flow quickly gets wiped out with repairs, vacancies maintainance management..or your trips back here trying to run them when things go wrong. 

    I know a few people who do well in that market, but I know a LOT more who don't. 

    5Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Pretty awesome, @Derrick E.! Well done. Nice property, @Rocky V. Congrats!!  $$$

    Thank you, @Dell Schlabach, for your input. Duly noted!  :)

    Best of profit, everybody!

    Daniel F. Harb

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    8y

    Must be nice . I am in the suburbs of  Balto/Annapolis/ Washington . What you all pictured id $200K in my area . I just got lucky and found a 2/1 in a good school district for $ 160K .

    Just an empty buildable lot will set you back $125K Hitting the 1% rule sometimes gets tight . But that house I just got will rent for $ 1550 a month 

    1Reply
  • Scott R.
    Investor · Beverly Hills, CA · Member since 2017 · 95 posts · 58 votes
    8y
    Originally posted by @Katrina P.:

    I invest in these types of properties, and they have been nothing but a positive experience for me, so please don't listen to people who speak negatively of these types of investments. It's the easiest way to get in for some, and as long as you have a good team on the ground to get things done when you need them done, it works out very well. The best place to find these investments is in the Mid-West. Happy Investing and Merry Christmas!

     He should listen to people from all sides of the fence. Speaking to people who have had bad experiences is valuable so others can learn from their lessons. These types of investments arent for everybody so I hope we can learn from everybody here. 

    6Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    I like this product for local landlords and have funded literally over a couple thousand of them.. but as a funder I will not fund to anyone that does not live within an hour of the asset when your talking those price points in MAJOR MSAs  but get out into the little burbs or lessor known communities and these can go well.. but in most major MSA's those price points are squarely in the roughest neighborhoods bordering on war zones if not war zones..   So use an abundance of caution travel to the area scope it out if your comfortable give it a go.  

    and for those that live in situ I would be keen on that asset class and stack them up.. that's what I do one of my clients in the last 3 years I have taken them from zero to 220 doors.. but they work it they live it its their full time job.. and its a JOB make no mistake running 220 low end rentals if you don't stay on it you will get your lunch handed to you.

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    11Reply
  • Katrina P.
    Investor · Randallstown, MD · Member since 2010 · 185 posts · 57 votes
    8y

    @Scott Roberts my point is not to necessarily negate anyone's viewpoint. However, his question was "Is this possible?" And since I know that the experience of me and others on this forum proves it is more than possible, I am absolutely going to say do not listen to naysayers. It's been proven to be possible. And I stand by that. Obviously this type (or any other type of investing, for that matter) won't work for everyone. Each of us have to figure out which type of investment will work for us.

    4Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    8y

    I generally buy 2-3 bedroom houses and try to get the final price around $40k - $45k, after rehabbing everything. Rents are good, and I generally pay cash, so the net cash flow after expenses and reserves is about $500/month.

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    3Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Well said, @Scott R.. I believe it is important to learn from the members that are on all sides. Every single post has at least some valuable info in it, I believe . This is definitely for some investors and not for others. 

    Thank you for your expertise , @Jay Hinrichs. You are absolutely one of the "Icons" on BiggerPockets, I am just getting my ducks in a row before the New Year and I start investing OOS. I can see how the super lower end price points might be difficult for an investor in OC, California, and I have no problem investing in the $35~$100K price point level. I just want to see all that is available from the super low end, to, maybe the $100Ks.

    I doubt that I would invest in a "War~Zone", I would have to live there (Or close), I am sure "Boots on the Ground" is necessary for that type of investment. I don't want my "Lunch" handed to me. :)

    Exciting, though, to be on the front end of investing OOS, just making sure I am doing Super~Due Diligence!

    Thank you, Scott R. Thanks so much, Jay H!

    Merry Christmas!

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Daniel F. Harb  part of it is luck to.. you can grab a section 8 tenant that lives clean and stays for years.. those are winning stories you can get a bad tenant and no matter what asset or what PM or what have you it ends poorly its simply the risk of landlording..

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    1Reply
  • Scott R.
    Investor · Beverly Hills, CA · Member since 2017 · 95 posts · 58 votes
    8y
    Originally posted by @Katrina P.:

    @Scott Roberts my point is not to necessarily negate anyone's viewpoint. However, his question was "Is this possible?" And since I know that the experience of me and others on this forum proves it is more than possible, I am absolutely going to say do not listen to naysayers. It's been proven to be possible. And I stand by that. Obviously this type (or any other type of investing, for that matter) won't work for everyone. Each of us have to figure out which type of investment will work for us.

     Correct. "Each of us have to figure out which type of investment will work for us." so I want to listen to folks that haven't had success investing in $30k properties. Sure, you can make money from them. However, there are also horror stories where investors wont want to touch them anymore. I want to know why. I'm glad you've had a good experience, but let's hear them all and not discourage those investors from posting here. 

    For example, I've made a lot of money flipping. I've also lost a lot of money flipping.  I'm sure people here want to know the risks associated with my flips and why I lost money. Just because I've made money, doesn't mean there isn't a  darkside that people should know about. It's not about being a naysayer. It's about openness and being transparent about our experiences. 

    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    @Dawn Anastasi  your the proto type of who can make this work.. you live there its your JOB and you do it well.. the person asking the question though is in OC  CA  and its a a whole different ball game when your trusting 100% of your success on others.. this is why caution is advised in these price points and for that matter anything that has to do with tenants.. no one can control all tenants all the time.

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    JLH Capital Partners51 Review
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    2Reply
  • Scott R.
    Investor · Beverly Hills, CA · Member since 2017 · 95 posts · 58 votes
    8y

    My best experience was purchasing a home in KC and working with a Section 8 realtor to get a tenant in. I had literally zero issues or major repairs in 7 years. Rent always paid on time, no complaints, and few repairs. It was in a B area

    Nightmare was buying a place in a warzone in Northern Las Vegas for 35k. I was able to cash flow it for about $300 a month but I paid for it w/ the amount of damages sustained by the tenants. The VMR was much higher than I anticipated  to the point that my cashflow was suddenly disappearing.  I just sold the place (after having to do $6k of repairs) and Im currently in the middle of a 1031. 

    Im on the fence about doing these investments again. I'm now focusing on multi-units to scale up my portfolio. 

    1Reply
  • Daniel F. Harb
    OP
    ARRT, RT(R) / Rental Property Investor · Newport Beach, CA · Member since 2017 · 360 posts · 242 votes
    8y

    Exactly right, @Jay Hinrichs. I am 2000 miles away, and it is imperative to have my house in order before I "Pull the trigger". Even if things go mostly right, it would seem in one fell swoop, just as like what happened to @Scott R., your wonderful cash flow of $200.00~$300.00 per month could go up in smoke with a $6000.00 repair job. Ugh...

    Even so, I will be investing OOS, no investment is guaranteed 100%, and if "Triple~Check" everything, I believe I will be fine. :)  No RE investment is perfect, and it is not "If" it will happen, it is a matter of "When". I will just be prepared for it.

    I've been there before, I'm sure I'll be there again.

    The important point is to get started!  $$$

    Cheers!

    ~Daniel F. Harb

    1Reply
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