Buying homes for cash

[Kiel Martin]

Hello all. I have never purchased a house and I am about to. I plan on purchasing rental properties with cash from $15k to $40k. What I was curious about is the closing cost of these types of homes, is it really on 3%. The homes that I am catering to is outside the city, but not denying myself to inside the city. Also, any advice for investors in baltimore would be great. I am new to all of this so any advice is appreciated. 

[JD Martin]

Originally posted by @Kiel Martin:

@Nick Cresci, thank you.... the minimum cost comment is what I needed to know. And talking to a title company in my area is also what I needed to know. 

@JD Martin, I will be doing my business in baltimore and I will not be following the standards of buying houses with a mortage. I see no reason to carry a mortage where they are thoussands of houses which can produce a positive cash flow without holding a liablity on top of that with a mortage. This is a unique busines plan designed by me specifically carter to my income. I buy, I hold, i rent out, have a property management company handle renters, and move on to the next. I got 20 years to do this before I retire and this is my starting year. The plan will be revisted after holding 5 houses. I will not be relying on renters to purchase my properties, they will be free and clear before having tentant step foot in the property. Baltimore is it own entity as far as cities go, and my business plan is far from the normal teachings which realestate is taught. Aslo, thank you for responding, very helpful and appreciated.

 I started out buying cash houses. I bought my first 4 or 5 houses all cash. But that was when $40k bought you a dump that could be turned into something nice.

I don't want to discourage you from getting started but I'm here to blow holes in your business plan:

1. Any house you find in Baltimore for $15-40k is going to be in a ghetto or destroyed and is going to cost a ton of money to get rent-ready, even for C-D class tenants.

2. You are never going to find a property manager that is going to deal with C-D class tenants, and if you did they would want a significant amount of your gross to do it. Managing C class housing and below is not for the faint of heart and it is a boatload of work.

3. You don't have to worry about getting mortgages because no one is going to give you a mortgage on anything you find in this price class. You will never refinance out of these properties either most likely. You will have a very narrow exit plan because you will struggle to find anyone to take these houses off of you when you get sick of working for free.

If you go the route you are suggesting I predict you will either find nothing to buy (if you look in decent areas) or, worse, will end up buying crack houses in war zones that will bankrupt you. Baltimore is one of the highest crime cities in the US and it's no accident they have buckets full of houses for $1000.