Long distance prices are unreal. Can they be true?

53 Replies

On average prices reflect values and values reflect supply and demand (rents). Keep in mind in some areas where there are homes for under 50K, the city gives these away for back taxes and or on the list to be torn down. Some of the cities James Wise mentioned above tear down more abandon vacant houses than the immediate area will build.  Sometimes you will find these same cities have scheduled to demolish over 1000+ homes. For example Detroit has over 15,000 homes in the demolish asap phase. 

If you thought Calif had a bad hood, go check on some of these out of state hoods, it might be on a whole other level of bad like you have never seen before.

Location really matters still.  Good luck with your search! 

Cap/ex ends up destroying your net income if any is even left after management bills out. 

12k...for a home.... its either a complete POS that will need a TON of work and/or is in a war zone.

It can be done.... by a local and very experienced investor...... but not by a OOS new investor......don't walk.... run away from these as a newer OOS investor.....

Originally posted by @Nathan G. :

There are cheap properties around the country that make some really good cash flow. They also have high turnover, lots of Tenant problems, high eviction rates, etc.

If it were all fairy tales and rainbows, don't you think other investors would have scooped those properties up already? Check out James Wise in Cleveland. He regularly sells properties for $60,000 - $100,000 to out-of-state investors and then provides property management. He also sells a lot of homes under $60,000 that he absolutely refuses to manage because he knows how problematic they will be.

$12,000 investments are a Siren Song for amateur investors. They will lure you in with promises of easy money and then dash your brains on the rocks. I would never recommend them unless you are a very, very experienced Landlord living in the area and able to monitor them directly...and daily.

 I think every investor thinking of buying in Detroit should read your post 100 times... if they haven't changed their mind read it more LOL

@Casey Maeda probably not that far off. And that is doing the work yourself. Im a DIY rehabber and unusually spend around 25/45k on a renovation for a small multi family property. That's with me keeping pretty much all rehab work in house. I'd be at 100k for the rehab alone if I hired it out. Then it's not even a workable deal anymore.

@Javier Rosales do you have someone you trust in Akron who can do due diligence for you? There are some areas in Akron that are fine and some that are not (the price makes me think this is in the “not” category).

Regardless of this rental, if you’re going to invest out of state you need a trusted expert on the ground to help you throughout the process.

Originally posted by @Matt P. :

@Michael P. Lol the entire duplex is bringing in 800 a month? What is it 2 studio apartments? I pay around 20k or less a unit myself but mine rent for twice as much.

You do your own rehabs, im a passive investor, two different models.

I purchased a house a couple months ago. It’s a 3 bedroom/1 bath brick colonial in Detroit. It’s in a C-class neighborhood very close to a large park and half a mike from a nice hospital. 

I paid $14,000 for it. 

I expect to put about $25,000 - $30,000 into fixing it up. It will look fantastic. 

ARV will be $55,000 - $60,000 and I'll rent it for $900/mo.

It’s not a huge home run, but I’ll get all or most of my money out of it and have some great cash flow.

To be fair, I got lucky finding this property. You aren’t going to find something like this in the BP marketplace. 

@Javier Rosales I bought my first SFH for 40,000. Then the second one for 24,000. Before I bought the properties I made sure of the location, condition, price range, and cash flow would be after I fix it. Remember, you are the one that can make the final decision to buy or not.

@Daniel Haberkost I would have to put together a team in Ohio, and pick a market their to invest in. I was just curious about out of state, because of other investors mentioning out of state properties.

Best one I did was a <C-class duplex dump for $13,250. I held it for several years as a rent-to-own for $28k @ 13% to a kid that had done the same with several other dumps I picked up in foreclosure. He walked away after getting stuck with a bad tenant (his trailer trash BIL). So I took it back & sold it middle of winter to a guy fed up with a moldy/pipe freezing single wide trailer he was renting. He offered me $38k $3,500 down @ 13% over 15 years & it will be paid in full this August. I've actually been there twice but have driven by it several times.

@Javier Rosales Ohio has some very affordable properties, especially compared to other states (like a California), but I’d be very cautious of any house for $12,000. I’m guessing it’s either going to cost a lot in rehab/may be some big ticket issues with it or it’s a rundown/high crime area. Or, also possibly, both a money pit and in a bad area.

That being said, you can find good deals in Ohio that cash flow nicely. Ohio has a good number of cities and bigger towns that investors like (Cincy, Columbus, Cleveland, Dayton etc etc).

The cheapest house we've purchased was for $6,500. No it wasn't a good deal. It sat empty for about 4 years since it was in such poor condition. We were going to fix it but every time we bought a more expensive property we concentrated on that so this one kept getting put on the back burner. We tried selling it to no avail. In May of last year we decided enough time had passed and we were going to work on it until we had it done. Our goal was to have it rented out before the end of the year... Well, it's February and it's still not done. We did work on it pretty diligently but both my wife and I had eye surgeries that delayed us, we worked on some other properties here and there, I made a trip to Africa for a couple weeks and so forth and so on.

We'll have invested about $20k on top of the $6.5k we paid by the time we're done but it should be a low maintenance solid rental. (1 bed 1 bath will rent for $450.00)

We can't sell it as we've invested about $50k worth of labor into it. lol.

But when we bought it, it sure seemed like a great deal...

It’s funny how people out west think these cheap houses need 20-30k of work in them and in the war zones  ! I’m glad you folks think this because I surely wouldn’t want you guys buying up my area !  Look this is common in the Midwest Especially if buy off market from distressed homeowners . My whole portfolio is houses/doors  under 10 grand .nice 3 bed one bath houses with garages big yards and wall to wall carpeting . In fact I try to buy in such a way that Most don’t need anything . If I posted up pictures you likely wouldn’t believe what you can get . Many times I did literally nothing to these besides a “for rent “ sign in the front yard . I keep my farm area an hour or so away all to myself ,in order to not  get competition but in Michigan Ohio and Pennsylvania this is fairly common to do . I would never put more than a couple grand into one of these homes but to each their own 

Originally posted by @Javier Rosales :

@Sandy Gabin where did you purchase the properties? And how did you find them?

 Like Dennis M. said, you can find good deals in Pennsylvania. I personally don't live there,  but I already started to buy there. I personally go to the city and the street and then I analyze because I can do it. If it is a good area,  I will buy if possible. 

@Nathan G. I have two 12 to 15 thousand dollar properties.. The first one was a foreclosure and after the bills are paid in nets 600 a month. The second one nets 450..These were my first purchases and yes we've had a few issues but after a bumpy initial start they are turning out to be decent rentals. I realize that they won't all be like this but for now I'm pleased

@Javier Rosales House number one had a preexisting basement water issue that took some figuring out how to correct.. Cost me about 2500 dollars.. The second house the seller was not forth coming at all and it wound up needing serious plumbing repairs and it needed a roof. I am still somewhat in the red on this one but in three months every thing I put into it will be paid back

Originally posted by @Michael P. :

I bought a duplex in Ohio yesterday (I live in Maryland) in a very solid rental area, definitely not a war zone.  $40k, $800 total rents. Will make upgrades and raise rents over time. But yeah a $12k property I wouldn't touch.

 now that is a solid looking prop for 40k  good job.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here