Low cost properties!! Are they worth the risk?

Question

Just wondering if low cost 15-40 k properties are a bad investment for rehab and hold. Seen a few that have been damaged from floods/ hurricanes in smaller towns. Not alot of investors around I guess. I'm a contractor looking to dabble in investing but worry there is a reason they are on the market? Any advice is welcome

Nick Rutkowski · Answer

@John Andrews

I bought a house on auction for 32k, put 20k in and turned it into an Airbnb. I gross 2-3k a month.

Carl Millsap · Answer

@John Andrews it depends on a few things:

1. What is the cost to rehab the property and what will it be worth when completed?

2. How much will it rent for as a buy and hold? How long will it take for you to get your investment back from the rent?

3. What is the neighborhood like?

4. What is the cost of ownership i.e. if it's in a flood plain cost will the rent provide enough to cover flood insurance, insurance, etc. and provide a return on your investment?

I wouldn't worry about what other investors may or may not find value in.

Some of us don't have the skillset you have so the cost of rehabbing a house hit by a hurricane / flood doesn't financially make sense; for you it may be a home run opportunity because you can do the work and therefore the numbers may work.

David Avery · Answer

Hey John,  I just moved from Pueblo Colorado and there were about 6-8 of us investors buying in a town of over 120,000 people.  It was a very good town for me because about 5 percent of the houses on the MLS  multiple listing service needed some good re hab.

As you know if you have the skills you can make money!!

I am sure you have the skills to make a house look great.

Go get one that has the roof line still standing and hopefully the structure is still good and

re hab that and make $15,000- $45,000 real quick.

Please do your due diligence.

Get a good real estate agent to show you the hot re sale area's.  And some good deals on the MLS

or for sale by owner.  Give him the listing when you are finished and do it over and over till you can

doing two at a time.  That way your busy working for yourself and your money is making just you

the money and not an investor because now your the investor and contractor.

Make sure your agent understands the neighborhoods and city that may make you update everything

to current codes!

Sounds like a gold mine because you can do the work man!

If you are at all a little scared get your name out there and do a couple for others first and see how

well they do .

Good luck John

Dmitriy Fomichenko · Answer

John, Good to have you here!

Low cost properties!! Are they worth the risk?

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