Anyone out there specializing in under 30k properties?
Buffalo, NY · Member since 2014 · 82 posts · 75 votes
Anyone out there specializing in under 30k properties?
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Real Estate Investor · Fort Wayne, IN · Member since 2013 · 168 posts · 78 votes
12yI buy houses in the $18,000-$23,000 range, typically put $3,000-$5,000 in them and then rent them for $650 a month. @Matt R. is right about the roof and furnace, they are profit delayers.
The key is to know the area or work with someone who does.
There is more to investing in any house than just working the numbers ahead of time to see if it will have positive cash flow and those are the factors that will kill you.
1. Contractors that you can trust, that do the job correctly and go above and beyond for you since you're not around.
2. A property manager who can rent the house to good people and make sure they are holding up their end of the contract.
People who buy expensive houses have the same issues, their tenants just drive nicer cars. It's all a process, just jump in and learn the lessons good and bad.
540 Replies
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Robert Ellis:
@Engelo Rumora let me know what zips and I can keep an eye out for you. you can message me if you want. I'm from Toledo too!
Hi Robert,
Thanks for your comment.
Feel free to send me all pocket listings you come across in 43611 (Point Place), 43612 (North of Sylvania and West of Lewis), 43613, 43615 and 43623.
Happy to catch up for coffee sometime also.
We work with Pat Brady from Danberry but am more than happy to entertain any pocket listings.
We are also actively on the search for 4 deals on the outskirts of the WL and can take them down straight away if the numbers work.
Thanks and have a great day.
- Rental Property Investor · Atlanta GA · Member since 2013 · 122 posts · 83 votes12y
Thank you Lisa for all of your hard work and dedication to the under 30K properties. Without you, I might not have taken this route, and I believe it's the best route for someone like me just getting started.
Thanks
- 12yJimmy MoncriefPro MemberChattanooga, TN · Member since 2010 · 319 posts · 100 votes
What I would emphasize is buying for less than $30k and the house being worth less than $30k are different things :-)
You are right to emphasize cash flow and not bad areas. Just properly forecast all of your projected maintenance expenses.
- Knoxville, TN · Member since 2014 · 43 posts · 5 votes12y
I moved from the Maryland area to Knoxville, TN and the houses that are here for 30K would go for 120 or more in the North East. My challenge has been learning this market.
So would it be a deal to get a 30K house put 5 to 10K into it and rent it out for $600 a month? It seems like a lot of money tied up for a little bit of cash flow, but then if you bought one $180K house and rented it for $1600 with $800 in cash flow or 6 30K houses with $200 x 6 = $1200 which is better? In the cash flow scenario the 6 houses is better but in the headache and long term appreciation of the house maybe the one house is a better option.
As a first time investor in real estate the above is my dilemma. The 30K houses just are not in the same kind of shape or neighborhoods as what I would live in. The neighbors don't keep their houses up, the roads are not in good shape, the landscaping is not good, and the schools leave something to be desired.
So which is better? One nicer house or 6 sub par houses? Even though it is a major headache I feel I am leaning towards the 6 30K houses to start our portfolio of homes.
Thoughts? - 12ySharad M.Pro MemberCarlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
I agree with what @Jimmy Moncrief said that the key is not buying $30k houses, but being able to buy $30k houses that are worth a lot more.
There are plenty of areas in my market where you can easily get sub $30k houses, but those are the areas that I would stay away from. The key is to be able to get $50k houses for under $30k and then add value to them.
- Investor · Arlington, VA · Member since 2012 · 1k+ posts · 491 votes12y
@William Ellis , your cash flow will almost always be higher with lower price points. As your purchase price rises, it's harder and harder to find deals that meet the "2%" rule. However, you may be better positioned for appreciation, but most BP members stress on not buying (e.g., speculate) on appreciation. I tend to do a mix bag and have liked the results so far.
- None · Virginia Beach, VA · Member since 2014 · 126 posts · 50 votes12y
@William Ellis What I do is look at the houses around a property. I also look to see what the houses are accessed for, and check to see if anything is scheduled for the community in the next few years. I know someone that purchased homes on a road that no one else would touch. I think seven or eight. He repaired them up to above standards and rented them. The city accessed the homes higher, because they maintained nice curb appeal. The next year the city came in and bought the properties for accessed value to widen the road. Actually he helped push the road project along, because more were starting to do the same, and the city realized that if buyers kept doing this, that the cost of the real estate would increase above the value they wanted to pay. He did know the project was on the board, however.
Now, I have to look also, and see what the home sold for originally. That tells a story alone. If the neighborhood turned somewhere along the line, hopefully investors will buy in it along with you. Many people when they get older like to buy properties they grew up in, and that includes slum areas. Chances are that if it was a nice area before, it will be again, but I cannot predict the future no more than you. Believe this or not, some homes are worth buying if they are sitting on a lot that is good, just because of the home itself. What if you could buy a 3BR/1bath brick home built in 1981 for $22,000. Would you buy it? I have and will again. Now at the same time would you buy a completely dilapidated home within a mile from downtown, that was a frame home that was built in 1934 for the same $22,000? I have done that also.
Now when I buy in real estate, I look inward, I normally know when I first see the property. I look at what it will cost to flip the home, rather I rent it or not. I offer an amount of money for the property that I know I can get within a year with what profit I should make after it is flipped. I may rent it to begin with and later sell it. What I am trying now is putting a "For Sale by Owner" sign in the front yard and put it on Craigslist with a price on it that I know will appraise for when I am done. If it doesn't sell in the flip time period, I will just rent it out. For a rental, I look at 3 to 4 years for my investment to return. If not, I continue to look. However, if a bank will give me a mortgage on the property after I flip it and rent it, for what I paid for the property, I will take it, and buy another property with the money. I let the rent from the property to pay off the credit card bills and mortgage. And repeat. Most properties, at this time period can produce a decent profit, if you have put into them what you should, providing the property is sitting on a decent lot. (Decent lot referring to not on swap land, sinkhole ridden or some other major problem). Also, just because you have doubled your money, does not mean you didn't earn it either, because you will. It is harder to sell a sub $150,000 property now, than it has ever been, in my opinion.
Now with all of the above being said, it is very possible that a sub $30,000 property can take two to three times of what you paid for it, to make it a castle. Make sure you keep risk insurance on them also. It is not cheap, but better than losing them during renovation. It is very possible to make a 100% profit on some properties, but they are few and far between. $10,000 to $50,000 profit is not out of the realm, if you did your job correctly, and you can find the right buyer. (10 Sucks but if I can dump it for that profit quickly, I will do it). Remember that time is money. I am working hard on trying to get flips down to just a couple of weeks, rather than a couple of months. To do that though, means me burning a lot of midnight oil. For this reason after 3PM today you will not see me on this forum much for the next 2 weeks.
- bennett, CO · Member since 2014 · 225 posts · 122 votes12y
Originally posted by @Edward Briley:
Wow, I cannot even believe this post. How to find sub-$30,000 properties? They are all over. Listen in my opinion, if you can pick up dirt (dirt being a lot) with a home on it that is usable for a very reasonable price is a no brainer. I have even been thinking of Detroit, because of sub $1000 homes. People listen, until investors get involved cleaning up communities - property values will decline. Nothing is wrong about buying a property in a bad community, fixing it up, flipping it or renting it out. Now with this being said, I make sure that if something would happen to the property, that I would be able to rebuild. Some older properties you may not be able to do it, because of new laws. In the past when a young couple was looking for a home, the only thing they could afford was a so-called, dilapidated dwelling. Now a young couple expects to move into a completely rehabbed home is their first property, and people wonder why housing values are not increasing? Listen Investors, it is up to you and I to rebuild these neighborhoods, that is our job. The housing market has never been better for someone that has saved their own money to buy a house for cash. Most people that have saved their money also have decent credit to flip these homes. Everyday I get up and scan all of the housing sites find homes for less than $30,000. I look at the property and figure out what it will cost to get it livable, or resell-able. Many properties I have to refuse or low-ball because it will just take too much money to rehab them, but if I can get it a a reasonable enough price I will buy it. Many slumlords will buy them, and rent them. I am not a slumlord, and for this reason realtor's don't like dealing with me, when I am the kind of investor that makes them money in the long run. Very few have ever made money by buying the best home in a community and letting it dilapidate. If you are that kind of investor, you are not an investor you are just greedy.
- bennett, CO · Member since 2014 · 225 posts · 122 votes12y
The house my son is purchasing will be in good condition in a couple of months and have great curb appeal. We do want to help the community thrive. OTHER than fixing up the house he will be renting, what can he/we do?
The things we are considering; My son needs to live in his home for 4 months before renting it out [Nationwide insurance requirement] so he is planning on meeting his neighbors during that time, having coffee, lemonade, and cookies on the front porch and welcoming all to help themselves a couple hours a day, joining neighborhood watch, and he and my grandsons are already planning to ask a few of the elderly homeowners if it would be alright to paint or fix their fences or whatever [small stuff] Would these be good things? And what else? Is there such a thing as a landlord support group, where landlords in low-income neighborhoods work together to improve things or will we have to start one?
- Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes12y
@Vicki Gleitz Those are great ideas.
- Hanging out and being neighborly is the most important thing.
- Helping a neighbor with quick fix (paint, broken mailbox, etc.) is always rewarding and appreciated.
- I like the find the worst house on the block, usually vacant, and mow it.
- Improve common spaces which might be otherwise ignored.
- Very selectively, hire a neighbor for some yard help/maintenance. It will pay dividends later (unless you pick the wrong guy/gal).
- Make your yard beautiful and low maintenance.
- Get the neighborhood board and focus on code enforcement.
- None · Virginia Beach, VA · Member since 2014 · 126 posts · 50 votes12y
@Vicki Gleitz I use the neighbors, people on the street to assist me in doing things, like tear out, removing trash, landscaping mowing the lawn and such. Just an idea. Cheap labor, just make sure they stay safe.
- Rental Property Investor · Atlanta GA · Member since 2013 · 122 posts · 83 votes12y
What are your thoughts on this?
So I just found out the boiler in the home is cracked. Bummer. I got a quote for the conversion boiler to furnace, but when I asked about keeping the copper in the home, the price went up 300 bucks. Huh? This particular company claims to offer deep discounts on the removal of the boiler/radiators but in exchange, they're going to take the copper and scrap it and get who knows how much for it.
Anybody else dealt with this scenario?
- bennett, CO · Member since 2014 · 225 posts · 122 votes12y
Originally posted by @Lisa Phillips:
Wow!!! Oh my goodness! I sorta teared up at the truth you guys started speaking. Yes, Yes, YES! We DO make a difference if we are responsible, AND our eyes are wide open. With this insight and knowledge, its a very win/win for every single person, as long as we treat the people in that neighborhood, our tenants, and are assets with utmost respect!
I love it!!! You're words add to the platform that I now advocate (I see a vision where my "middle class army" of regular people learn not only how to build wealth, how to transform their businesses and the communities they do business in! To see you all making it happen, and experiencing that feeling of success, validates so many of the hours I put into trying to make people see, not with naivete, but with a savvy business sense and a feeling of responsibility. Im going to keep reading this thread, but your words speak truth to power, and we can really make a difference in this world. A SERIOUS, heartfelt difference. Much success to every single one of you!
Lisa, You are such an incredible young woman! I love your integrity and compassion! Many people should possibly stand next to you without saying a word in hopes that your KARMA rubs off on them [except it does not work that way]
My 20 year old son closes on his house next Monday. Because of extraordinarily painful neurological problems, he will be renting the home out and staying with us for a few years until the home becomes a part of an Autistic community a group of us are working on starting [ my sons' neurological pain is not connected to him being Autistic]
He had already decided that he has a responsibility to improve the neighborhood and we had already thought of differrent ways to do so [ mentioned earlier in thread]
Just yesterday we were at the property taking measurements for rehab projects on the home and met a couple of the neighbors.[ they let us taste green chili they were cooking, best in the world EVER] We told them of my sons' plans for helping to spruce up the neighborhood. We were super upset when they made us aware that not all, but MOST of the neglected looking homes in the neighborhood are rentals owned by landlords who don't care. We were/are devastated and angry.
Being 'creatively" wired, I have always thought outside the box [ I have never been in the box. For years I looked for the darn thing. Recently, when I became aware that there were probably NOT chocolate mint girl scout cookies in there, or anything else of real value, I stopped] and talked with the neighbors about possible solutions. We will be discussing this with them more after the closing, but we are thinking about some sort of "rate your landlord" type project that is accessible for everyone in the area. Even homeowners living next to landlord owned homes could give their input. And I think that could twist the arms of greedy landlords to take care of their properties and treat their tenants right.
There is a huge amount of burglary and vandalism in this area. My understanding is that many long-time residents feel that much of the vandalism is a direct result of animosity towards unfair landlords. I can understand this. We want to be positives in this area, and I think that the mentioned project might be one way to do so.
- Rental Property Investor · Columbus, OH · Member since 2014 · 340 posts · 111 votes12y
I'm not sure that going in trying to convince greedy landlords to listen to you is the approach I would take. Have you thought of forming a landlords group? Maybe a quarterly meeting of owners in the area? Or you could flat out send them a letter saying that you want to buy their property - them problem solved.
Another option would be to get a particularly adamant owner occupant in the area to chair the neighborhood watch committee.
- bennett, CO · Member since 2014 · 225 posts · 122 votes12y
What totally frustrated me in the "Harry Potter" series was the admission process to get into "Hogwarts." Though Dumbledore and most of the staff were most excited about the wizards who would grow up and use their powers to make the world a better place, those who followed the teachings of "He Who Shall Not Be Named" were also welcomed to be taught, no matter how greedy their intentions might be.
- Investor · Chorley, Lancashire · Member since 2013 · 82 posts · 22 votes12y
Great Idea for a group. Think it's particularly good for us newbie investors wanting t get out of analysis paralysis stage and get the first deal under our belt.
Local knowledge is key as I think even one streets difference can be the wrong area.
Have been trying to get in on the under 30k deals but found quite a few realtors dismissive and downright rude about my approach. "Apparently if these deals existed then the Realtors would be buying them up!" "All house under 30k need that much spent in them again" or so I have been told. Even as a newbie I know that not to be true . Looking at the posts it is clearly not.
- Investor · Chorley, Lancashire · Member since 2013 · 82 posts · 22 votes12y
Hi Everybody,
My situation is a little bit different from many of the BP members, as I am based in England. I have been trying to develop a way for me to buy under 30k properties long distance successfully and safely.
I am in the Navy and spend three months away at sea, this gives me plenty of research time.
I have read and seen how, with the right systems people can buy out of state, like you could by in Ohio for example without ever visiting the place. That's if you put in place the right systems. The problem is developing the systems.
I think if people are investing out of state what is the difference between out of country? If money is to be made in a market outside of your own then you must go to that market.
I have read a huge amout and been through most of the podcasts making notes and trying to learn as much as possible. What I tried at first I was contacting a listing agent and saying I would offer x amount subject to them taking pictures of a property to confirm current state, any mechanicals such as HVAC must be included and any defects such as broken items and things that need to be repaired or replaced must be in those pictures. I said that my offer was based on my acceptance of the pictures, my thought being I could walk away. To my surprise the agents did respond and this was a way I found I could "view" long distance. The properties under 30k would be in depressed markets and I figured that the agents may be more likely to help out. When I tried this in other markets agents seemed very rude, perhaps justified?
My viewing would be then backed up with a home inspection and online due diligence from various online sites.
With regards to contractors and PM companies my plan was to use BP to find these or yellow pages. I would then try to vet these people using references etc, but you can see the problems with that.
To be honest I lost my nerve and never pulled the trigger.
However....I am hoping to close on something in the next day or so and will happily let you know how things go.
For me the returns in the US compared to England justify the amount of hours I have put into this, and I really enjoy it all anyway which is usefull.
My plan is to offer people truly turn key properties, giving a minimum of 2% a month using contacts I have made through research and refining of my methods after my first purchase.
I think if I can say to people here is a house rented giving min 2% it's recently been rehabbed is tenanted here are the pictures,here is a copy of the home inspection report etc etc.With a tenant and property management company in place it takes out all the hassle.
For an out of state investor who can only invest in under 30k properties this would be a good option. Not everybody can afford to pay some of the high prices of property, but we all have dreams in life. If we use our minds and think out of the box, 9 times out of 10'we can work something out.
Glad to here what you all think
- Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes12y
Warning...Long answer,
@Nick Lee first of all,
Thank you for your service!
I read your post great interest because although I am not active duty military, I work closely as a teacher on Yokosuka Navy base. I can relate to the difficulties of trying to build a team from abroad. The road is paved with countless obstacles and one not to be ignored or underestimated is the peril of the unscrupulous who are just sitting waiting for those of us in this situation.
With that out of the way, I want to commend you on not giving up. “Persistence and consistency” are the two things most guests tell @ Brandon Turner make the difference between triumph and failure. You seem to have them both and should continue to cultivate them.
I don’t know how your States side rotations work but I do believe you have to spend some time on the ground in your desired market looking people in the eye. That may not be possible, so how about continuing to develop your ideal system and work on finding a like-minded partner who can be the boots on the ground person? This all takes time and it looks like you are using you are investing your time underway wisely. Best wishes on your closing and do keep us posted.
I want to add that you should tell EVERYBODY about your real estate activity. I went home to GA this past summer with the firm resolve to buy my first property. Worked on getting the money together and everything ready. Built some relationships online and was fortunate to meet a couple of those people and they were better in the flesh than in cyberspace. I did discover that by neglecting to tell EVERYBODY, I almost didn’t reach my goal. I found the property two days before returning to Japan but had told one very right person who became my back-up project manager and did a fantastic job. His complaint was…”Why didn’t you contact me sooner?”
There are quite a few military and military associated people trying to figure this out. Perhaps we should put out a request for everybody in this situation to weigh in. I know some are quite advanced and successful while many of us are just starting and trying to figure it out.
Best of luck!
Pyrrha
- Real Estate Investor · atlanta, GA · Member since 2013 · 456 posts · 237 votes12y
Sub-30k is a difficult market to work unless you are boots on the ground....no real way around that....even with a very solid property manager. Yes, there are plentiful deals.....and yes....even Detroit might one day be a goldmine for someone who buys the "right" $1,000 home and oil is discovered in the backyard. I've chatted with a ton of newbie investors from BP and probably the best thing for most to do is to earn 8% to 12% on funds as little as $500 by joining forces with crowdfunding sources like groundfloor.us Crowdfunders handle the due diligence and the small investor can't earn these kinds of returns anywhere else.
In metro atlanta, there are still sub-30 deals but they are in warzones for the most part. We buy them and typically spend just as much....$20k to $40k fixing them up but if they work for our shared housing program and the properties cashflows for our back-end buyers....then we go for it. If you do these kinds of deals, you and/or your property managers have to get to know the neighborhood and the neighbors on a personal basis....at least if you want to be successful. On these lower end rentals, our shared housing program works well as it brings affordable housing to the area and consistent cashflow to our properties & partners.
- 12yKenneth HynesPro MemberRental Property Investor · Easton, PA · Member since 2013 · 359 posts · 92 votes
I am active duty as well, but have not invested in the 30K market yet. Lee your plan is good but really believe you must know the area i order to build your systems. I am a long distance landlord in 4 different cities, but was able to build contacts and know the area because i lived there, and when I PCS'ed I put those systems into place (PM, maintenance, banking) so it helps alot to know the area
ken
- Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes12y
@Kenneth Hynes I just purchased my 1st in August and it wasn't in the Sub $30K range. From where I am, I'm thinking you have to be more local and or experienced than I am to successfully and confidently work in that niche. However, I do believe we can invest and be successful as long as our systems are solid.
Congratulations on your success and may you have much more.
Pyrrha
- Investor · West Bloomfield, MI · Member since 2014 · 58 posts · 17 votes11y
In Detroit and the surrounding suburbs you can get involved around the 30k mark. The further out from the city you go (generally speaking) the price goes up.
- Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes11y
Originally posted by @Nick Lee:
Hi Everybody,
My situation is a little bit different from many of the BP members, as I am based in England. I have been trying to develop a way for me to buy under 30k properties long distance successfully and safely.
One option is doing a JOINT VENTURE with someone from the ground and this person has MONEY TO LOSE. @James Wise works in Cleveland OH and even though I have not done any business with him yet, his thinking is similar to mine. The choices for an out-of-the country investor are:
1. You develop the systems and the on-the-ground team yourself - downside: it will take you too long to do it and you will spend several thousands of dollars visiting the place where you're going to invest, recruiting members of your team and then training them not just one time but on an on-going basis. Upside: you have MAXIMUM control.
2. You buy a property TURNKEY. Downside: you have MINIMAL control and you buy the property at top price. Which means you make the least amount of money.
3. You JOINT VENTURE with one with "skin in the game" or has money at stake in the property. You can structure something like this:
- YOU put up the money to buy the property
- Your JV Partner puts up the money to repair the property and manage it as well
- YOU and JV Partner splits the profit 50-50JVs when done properly with the right partners has the upside of giving you SOME CONTROL while doing MINIMAL work. You leverage on the JV Partner's expertise, experience and his team on the ground.
- Orlando, FL · Member since 2011 · 176 posts · 23 votes11y
Great thread guys. A couple questions about how to pyramid these investments:
1. Are banks typically willing to refinance $30,000 homes? What LTV can be reasonably expected?
2. Who's been successful attracting private money? Are the investors happy to loan the smaller amounts we're working with, or does it create objections?
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