Advice for investing in 30K properties

14 Replies

 

I am exploring different investment options and wanted to hear people's experience with investing in 30k properties. Hope everyone is staying safe and healthy during this time!

@Claire Rosenberg

If you have to ask about 30k properties in Chicago, more than likely you aren't ready to deal with 30k property problems.  

30k would be C-/D properties.  High turnover, crime, property damage, etc etc.  There are a few players that make a great living in those areas, but majority would not.  Don't let the cost of the property blind you.

i have done 2 ..30k properties   in the past  4 years  here in Houston,Tx  area  , needed alot of work , foundation /roof / electric /plumbing ... big ticket items  , wasn't bad , becaue the neighborhood comps were in the 110k range    , after all said and done , listed and sold for 100k  , spent  on  rehab  35k / comm /closing 10k   came out with 25k profit ... 

It is all about what you want as a return... Doing a F&F on a property at $30K and one at $200K is about the same... Difference is the return amount is way different... 10% of $30K = $3K 10% of $200K = $20K You also have to look at your budget before making any decision... If $30K is what you expect to use then maybe use $20K for a down and $10K for repairs and make a $20K profit by financing the deal... Just an option...and very rough numbers...

@Claire Rosenberg your returns or losses can be massive. My biggest return property I paid 25k for. Did nothing to it, continued to collect rent and sold it for 38k a year later. My total return was north of 50 percent.

This was in a D class neighborhood

Originally posted by @Claire Rosenberg :

 

I am exploring different investment options and wanted to hear people's experience with investing in 30k properties. Hope everyone is staying safe and healthy during this time!

Realistic expectations when investing in a $30K property in Chicagoland

  • In Chicago proper the location will be a challenge and the property will most likely need a full gut or a teardown. You can make $ but it will require managing challenges that go beyond updating the home
  • In the suburbs- Taxes, taxes, taxes,.... pay close attention to taxes. We know someone who's getting rid of a portfolio of Single Family Homes between $30K & $45K which are rented between $1K & $1200. He can't move them because the takes range from $9500 to $12K per year. There are deals in the suburbs but you must pay close attention to taxes.

 

Hey @Claire Rosenberg - my experience buying a $30k property was not the best. You can read all 33 pages of it here: https://www.biggerpockets.com/forums/92/topics/392727-morris-invest-case-study-20

LESSONS LEARNED:

-Properly vet the people you work with

-The numbers on paper (no matter how amazing they are) don't automatically make it a great investment

-Understand the tenant class you'll attract with that type of low-value asset

-Understand the condition of the asset you'll be buying. For $30k, you're probably getting an old run-down asset that needs work and will continue to need work, which cuts into your ROI

-$30k houses don't bring in a ton of rent, but the expenses are relatively the same on that asset as a more valuable house that brings in more rent. EX: a new roof on a $30k house that's 1,000 square feet will probably be the same price as a new room on a $100k house that's 1,000 square feet.


Let me know if you have any questions. Happy to chat.

-Tyler