I’m looking to buy my first rental property. The man Inherited the house. He’s asking $25,000 for the house. The tax value on the house last year was $37,000. this year it’s down to $24,000. he went in and did some repair work. it’s what you call putting make up on a pig. The house is a 2 bedroom 1 bath. The rent would be around $400 or $450 a month. I know I would have to do a little work on the house, but my intentions is to buy and hold. With the BRRRR effect. What would be a good offer on the house? I was thinking around 15000 to 18000? Also even at 25000 it still fit the 1% calculations.

@William Hyman you probably won’t be able to finance a property with such a low price, meaning if you pay cash, you likely won’t be able to refinance.

There is very little money to be made on a $450 rent income. Repairs will be the same as any comparable property renting for 1K. I do not believe cash of 18K is well invested in this situation. You would be better off finding a more valuable property that the 18K could be used as a minimum DP on.

I assume a D neighborhood. also its close to 2%. but anything that rents for under 700ish os going to cost you. paint and doors cost the same for a property that rents for 1200, but atleast you can renovate it every year at higher rents. Also guessing an offer price usually is a poor decision.

Around here rent is kinda low. We have a lot of investors selling off their portfolios. On top of that I only have about $30,000 to work with, and I am trying to acquire about 20 houses within the next two years. I figured if I could get the house for around 18,000 I can put a few thousand into it an hopefully bring the value back up to $37,000.
The neighborhood is a C/D.

Howdy @William Hyman

The point has already been made on the likelihood of getting any conventional financing on properties with that low of value. Do not use tax assessments to determine the Market Value of the property. You need to be using recently sold comps. Use that to determine your ARV. If similar houses that are in good condition are selling for $24,000, then, that is the Market Value/ARV and not your $37,000. However, if the same houses are selling for $37,000, then ,your good with your expected ARV. You do not want to be "Hoping" for a certain price.  Your want to "Know" what a reasonable price is. 

I totally agree we everyone regarding the low rents.  It makes it extremely risky trying to maintain properties with such low rents.  Why do you think a lot of investors are selling their portfolios!  Probably losing money as long term investments.

To make low value properties work you may need to group a few together to be able qualify for refinancing. Loan amounts need to be over 50k to really have more lenders to choose from. You may need to look at portfolio lenders as apposed to conventional ones. But, as we have said the real problem is the potential maintenance and Capitol Expenditures (CapEx) costs along with vacancies (loss of income) with these types of properties.

You might be better off looking into the possibility of doing a flip with this property.