The Cheapest Property Isn't Always the Best Deal
Aiden AvtgisBusiness Member
Real Estate Agent · Cleveland, OH · Member since 2024 · 51 posts · 34 votesPicture two houses on the same street in Northeast Ohio. One is listed at $75K. The other is $100K.
The $75K house looks like the obvious win. Then you walk through it. It needs a roof, the furnace is on its last legs, and there’s a decent amount of work to do before a tenant could even step inside.
The $100K house down the street is in good shape and ready to rent.
Now the math gets interesting. Add the repairs, the months the house sits empty while the work gets done, and the holding costs that keep running that whole time. That $25K gap closes a lot faster than most people expect.
Does that make the cheaper house the wrong buy? Not necessarily. If you're after a BRRRR or a flip, taking on a rehab is the whole point. If you want a rental that earns from the first month with no work upfront, paying more can make sense. Neither approach is wrong.
What I see is investors getting so locked in on the purchase price, especially in a market where low price points are still out there, that they forget to ask what it’ll take to get the property where they want it.
What you pay for a property is only part of the equation. What you have into it when it’s all said and done is what matters.
What's your cheapest, most expensive property?
You are asking the right question, Aiden. The purchase price is only the start — the real cost is the months the house sits empty while work gets done, plus the holding costs that keep running. In Memphis we run 236 doors, mostly single-family, and we price every deal on rent-ready time, not just repair cost. Turnover and vacancy cost more than repairs, so a house that needs a roof and a furnace can eat that $25,000 gap fast if it sits empty for two or three months. We run rent-ready turnovers on a 21-day scheduling system for that reason. If you want rent from month one, pay for the house that is ready. If you take the rehab, be honest about how long it will really sit empty. What rent are you underwriting on the $100K house?
I completely agree. I think investors sometimes focus too much on the purchase price and not enough on the total cost of getting the property ready.
I'd also add that the exit strategy matters. A property that looks expensive for a rental investor could be a great opportunity for someone doing a BRRRR or a flip.
The real question is: which property offers the best return relative to the capital and risk involved?
Have you noticed investors in Cleveland becoming more selective about rehab costs lately?
I completely agree. I think one of the biggest mistakes investors can make is evaluating a property primarily by its purchase price rather than its total cost to get it to the point where it achieves their investment objective.
A $75K property that requires extensive repairs, months of holding costs, and additional capital before it can generate income may ultimately be more expensive than a $100K property that's already rent-ready.
That said, I think the real distinction is understanding the buyer's strategy before deciding whether a property is actually a good deal.
For a BRRRR or fix-and-flip investor, the cheaper property with substantial upside may be exactly what they're looking for. For a buy-and-hold investor prioritizing immediate cash flow and fewer operational headaches, the more expensive property could be the better acquisition.
This is also why I believe sourcing should start with understanding the investor's buy box rather than simply looking for the lowest-priced properties.
When I evaluate opportunities for potential buyers, I want the essential details upfront: purchase price, beds, baths, occupancy, known condition issues, and the work required to make the property usable.
The goal isn't to find the cheapest house. It's to find the right opportunity for the right investment strategy.
Curious, Aiden: in your experience across Northeast Ohio, do you find that newer investors tend to underestimate rehabilitation costs more, or the holding costs and time involved in getting a property rent-ready?
Aiden, you have it right — the purchase price is only the start. I run 236 single-family rentals in Memphis, and I buy under $100K with an ARV of $180K to $265K, 3BR or more, Section 8 rent of $1,395 to $1,950. What decides it for me is the all-in number against that ARV and the rent, plus the 1% rule. A cheaper house that needs a roof and a furnace can eat the price gap fast once you add holding costs and months empty. I convert 2/1s to 3/1s and 3/1s to 4/2s when the rehab math supports it, because the extra bedroom moves the rent. So I underwrite every house the same way: buy price plus rehab, against ARV and rent. If it does not clear, I pass.