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

75 Replies

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)

714-470-4152

@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!!

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!

@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!

Wow, @Derek 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

714-470-4152

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.

Whats a $30K house ?   Never seen one 

@Caleb Heimsoth @Katrina P. @Derek 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.

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

714-470-4152
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!

@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


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. 

(330) 432-6927

This post has been removed.

This post has been removed.

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 

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. 

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.

@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.

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.

Well said, @Scott Roberts . 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!

714-470-4152

@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..

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. 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.