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?
Most Popular Reply
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
- 12ySharad M.Pro MemberCarlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
Originally posted by @Austin S.:
@Douglas B. I am by far not a specialist. My first buy and hold was April 2013 that I purchased for $32,300. It was a HUD property. I put $12k into it so I was right around the $44k mark. Rented it in no time for $700 per month. Closing on another property this coming week for $36,600 that doesn't need any work before a tenant can move in (eventually will replace roof this spring or summer) and it will rent for $600 per month. I am in a small market in a town of about 15k people but the rent to purchase ratios can be pretty decent if you look hard and long enough.Those are some good deals. What do you think the ARV is for these properties? Is there a lot of competition for these kind of properties in your market?
- Real Estate Investor · Abu Dhabi, UAE · Member since 2010 · 48 posts · 16 votes12y
Some of my SFH's definitely qualify here.
I picked up 10 Homes in the last few years in FT Wayne, IN for well under 30k.
Average purchase price was around 7k (High of 10k and low of 1.5k)
Average Rehab was 4.5k
Rents run 400-600
Now i picked all of these up while deployed overseas so everything was done remotely. There have been plenty of issues over time, but due to the extremely low buy-in prices, the overall ROI has been excellent and most have already paid off the original investment.
All that being said, I would agree with those that recommend caution when dealing with lower income properties from a distance.
Warren
- 12ySharad M.Pro MemberCarlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
Originally posted by @Warren Foster:
Some of my SFH's definitely qualify here.
I picked up 10 Homes in the last few years in FT Wayne, IN for well under 30k.
Average purchase price was around 7k (High of 10k and low of 1.5k)
Average Rehab was 4.5k
Rents run 400-600
Now i picked all of these up while deployed overseas so everything was done remotely. There have been plenty of issues over time, but due to the extremely low buy-in prices, the overall ROI has been excellent and most have already paid off the original investment.
All that being said, I would agree with those that recommend caution when dealing with lower income properties from a distance.
Warren
It's hard to achieve what you have when you live locally, but to do all this while deployed overseas makes it extremely impressive. Great job!! Keep up the good work..
- Santa Barbara, CA · Member since 2014 · 49 posts · 11 votes12y
Wow, what areas are you all talking about? 10- 15 - 30 - 50K? Is this Detroit? abandoned falling down houses? Send me some info on the areas, schools, neighborhoods - and if this is real, sign me up for 20 houses all cash - 2 week close (after inspection). I hate to sound pessimistic - but holy moly.
Rooms out here don't rent for less than 900. House rent is 18 - 3,000. Prices are 190K (cheap/bad neighborhoods) to 7 figures. Average about 600K.
And using your numbers, 650 rent, with GREAT financing rates that would be (use the 1% rule) as a PITI, minus a bit for a great interest rate. The numbers are - well - strange.
Send me legit info, I'll buy several all cash and pay a finders fee. no games.
- Stoneham, CO · Member since 2012 · 52 posts · 5 votes12y
@Sharad M. The first property I bought appraised at $61k after repairs which allowed me to refinance at 75% LTV and pull all of my cash back out so I am in this one with none of my own cash. Of course, you know the cash on cash return there! The one I am closing on next week has an as-is appraisal of $44k. After a new roof and maybe some new floor coverings I would guess ARV might be above $50k. With both of these being buy and holds though, I am more looking at the cash flows instead of ARVs.
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Warren Foster:
Some of my SFH's definitely qualify here.
I picked up 10 Homes in the last few years in FT Wayne, IN for well under 30k.
Average purchase price was around 7k (High of 10k and low of 1.5k)
Average Rehab was 4.5k
Rents run 400-600
Now i picked all of these up while deployed overseas so everything was done remotely. There have been plenty of issues over time, but due to the extremely low buy-in prices, the overall ROI has been excellent and most have already paid off the original investment.
All that being said, I would agree with those that recommend caution when dealing with lower income properties from a distance.
Warren
I always say that when dealing with lower income areas and also if buying from out of state or even country the #1 key is to have a great team on the ground in the particular area.
Also, property management will either make or break the investments.
Thanks
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Tony H.:
Wow, what areas are you all talking about? 10- 15 - 30 - 50K? Is this Detroit? abandoned falling down houses? Send me some info on the areas, schools, neighborhoods - and if this is real, sign me up for 20 houses all cash - 2 week close (after inspection). I hate to sound pessimistic - but holy moly.
Rooms out here don't rent for less than 900. House rent is 18 - 3,000. Prices are 190K (cheap/bad neighborhoods) to 7 figures. Average about 600K.
And using your numbers, 650 rent, with GREAT financing rates that would be (use the 1% rule) as a PITI, minus a bit for a great interest rate. The numbers are - well - strange.
Send me legit info, I'll buy several all cash and pay a finders fee. no games.
lol only 20? haha jokes
- 12yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Originally posted by @Matt R.:
Originally posted by @Engelo Rumora:
Currently focused on sfh in Colorado Springs and surrounding. But I am open to investigating all areas. I am looking primarily at demographic trends to determain buy and hold possibilities. I do test marketing as well.
Thanks,
Matt
Ok cool,
I don't know much about Colorado Springs.
What are the numbers like in their?
Thanks
- Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes12y
I have bought several under $30k in Atlanta or Decatur. I like this strategy when the houses are 'in the path of progress'. To me this means the neighborhood is going from C to B or B- to B. I could flip or hold/rent these properties and get a healthy return.
Glad to see I have good company.
Rick
- Buffalo, NY · Member since 2014 · 82 posts · 75 votes12y
Originally posted by @Tony H.:
Wow, what areas are you all talking about? 10- 15 - 30 - 50K? Is this Detroit? abandoned falling down houses? Send me some info on the areas, schools, neighborhoods - and if this is real, sign me up for 20 houses all cash - 2 week close (after inspection). I hate to sound pessimistic - but holy moly.
Rooms out here don't rent for less than 900. House rent is 18 - 3,000. Prices are 190K (cheap/bad neighborhoods) to 7 figures. Average about 600K.
And using your numbers, 650 rent, with GREAT financing rates that would be (use the 1% rule) as a PITI, minus a bit for a great interest rate. The numbers are - well - strange.
Send me legit info, I'll buy several all cash and pay a finders fee. no games.
Nope, it's the real deal Tony. There are deals to be had.
- Buffalo, NY · Member since 2014 · 82 posts · 75 votes12y
anyone interested in following along with this specialty focus of investing can follow along by adding a keyword notification for SUB30kCLUB. I'll put that in the title of every post I make. I'm also starting a blog here on BP to share our experience from planning to soon making our first purchase.
Follow along and let's help each other!
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes12y
Originally posted by @Engelo Rumora:
Originally posted by @Matt R.:
Originally posted by @Engelo Rumora:
Currently focused on sfh in Colorado and surrounding. But I am open to investigating all.
Engelo,
The numbers are 2% plus if you get a deal.
Low taxes, landlord friendly. Numbers are solid. Demand is high, tenants might be too, very few vacant homes style. Might appreciate 5% but if you get a deal, closer to 100%.
Average tenant quality but compared to what I have seen in other 30k markets - above average.
There are some early 1900s home but I look for 1950s and newer.
Thanks
- Investor · Macomb, MI · Member since 2013 · 654 posts · 115 votes12y
Originally posted by @Douglas B.:
I'm looking to form a networking group of people who specialize in under 30k properties for cash flow. I propose we share ideas to help each other maximize our success!Yes we are out there. and yes as mentioned on the first reply, @Lisa Phillips seems to finally get peoples attention.
I am not going to read this complete post but I do want to tell you that it is possible in some areas. Don't listen to anyone that tells you it's not.
Good luck on your ventures and I welcome any questions you may have.
- Real Estate Investor · Arlington, VA · Member since 2012 · 302 posts · 277 votes12y
I think it would be nice to have a community of like-minded, fearless, profitable investors. We can share "state secrets" on where to find these great real estate investments. It seriously isn't hard at all, you just have to get over yourself a little.
- Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes12y
@Michaela Graham , I thought you would enjoy and be a great contributor to this thread. :-)
Rick
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
Well, I bought several for around 10K a few years ago, but I didn't do it to be a longterm landlord, but because there's stuff happening in the area. They're renovated and I have tenants in them and I manage them long distance. The important part is having good people that you can call when things break
- Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes12y
I haven't looked through all of this, but I'd be real interested to know who out there can actually speak from a position of considerable successful experience on this topic. In other words, who has met these criteria?:
- Owned these types of properties for 5+ years, at least at moderate scale (say at least 5+ of these houses).
- Netted 50%+ of the gross potential rent over this 5+ year period, after compensating yourself at least $20/hr for the time you've spent AND covering ALL maintenance that was incurred beyond your initial rehab (even if you capitalized it on your taxes)
- No regrets and has enjoyed managing these properties (or at least hasn't regularly wanted to bludgeon yourself)
Color me just a tad skeptical, it sounds GREAT on paper, but the long term reality? Does anyone on this thread meet the above criteria? And has anyone done this successfully over time, long distance using a property manager (can't even imagine)?
I'm positive that @Rob K. qualifies (though not sure about point #3??), but he is also a hands-on management pro and admits that property mgrs have been a bust when he's tried them. Anyone else?
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes12y
Well, I have 5 SFH and 5 duplexes, bought '08/09/10 and while I've had plenty of headaches in that time, I don't regret it and would buy more, if I had the cash.
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes12y
Not me David,. I am fresh off the investment train. I did manage 14 LA doors back in the 1900s. The areas I am currently in do not appear to be nearly as gnarly, dangerous or old as the other 30k buy priced markets I have noticed others in. Specifically,
on the demographic side of this business.
I am doing a combo of self manage and team boots on the ground, lawyer, maintance etc. I am not turning over to pm yet for many reasons but mostly expense control. This one moved has saved thousands. I have a working formula that needs 50% off ARV to make it fit. So 30k is arv 60k home. Looking forward to all of your sound and savvy advice.
Thanks,
Matt
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes12y
There is other parts to formula but the basics are all in 30kish, 60k + arv. The 30k should include newer roof, hvac, plumbing, electrical, windows, floors. Any of this would have to include a c+ tenant quality. From what I have seen around the country at least 90% of the 30k market the tenant quality is not acceptable to run a business and not c+ from my perspective. Seems most are calling D- , c or c+. I think its wishful thinking if hood is partially abandoned, schools are shot to hell and lowlifes are roaming around somehow that is C hood. Block to block areas don't qualify as C hoods in my mind either.
Of course there are exceptions and every deal is circumstantial.
Thanks,
Matt - Real Estate Investor · Arlington, VA · Member since 2012 · 302 posts · 277 votes12y
@David Beard - no, I have been doing this successfully since 2009. Is success or failure a 5 year pass or fail? So, does it matter what has happened in years 1 and 2?? Where did this arbitrary 5 come from? That sounds like more YOUR metric, not necessarily anyone elses. Should I throw my properties away now, or am I still a failure (even though i cash flow mightily and investing is as smooth as a baby's bottoms most days)?
For me, a year or not makes no difference on whether I get tenants: The state that I keep my properties in and the price I charge has more to do with that. Does it mean anything for the rents?? Well, in 4.5 years since its been stable rental income.
Here is my view: Im not trying to convince you that 30k properties can be very profitable and successful (they can be). I really just want to deal with people who 1) Believe this investment strategy works and 2) Are willing to find a way to make it work out for them
This isn't for you. And that's fine. But putting your arbitrary 5 year mark out there to tell me or others that what we have done is valid over the last 1, 2, 3, or 4 years? Well, that's a bit out of order to denigrate anyone's hard work because it hasn't passed your muster.
And, have YOU tried properties in this price range? Did you Fail or Succeed? Because, it doesnt take 5 years to know whether you have or not.
- Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes12y
Originally posted by @David Beard:
I haven't looked through all of this, but I'd be real interested to know who out there can actually speak from a position of considerable successful experience on this topic. In other words, who has met these criteria?:
- Owned these types of properties for 5+ years, at least at moderate scale (say at least 5+ of these houses).
- Netted 50%+ of the gross potential rent over this 5+ year period, after compensating yourself at least $20/hr for the time you've spent AND covering ALL maintenance that was incurred beyond your initial rehab (even if you capitalized it on your taxes)
- No regrets and has enjoyed managing these properties (or at least hasn't regularly wanted to bludgeon yourself)
Color me just a tad skeptical, it sounds GREAT on paper, but the long term reality? Does anyone on this thread meet the above criteria? And has anyone done this successfully over time, long distance using a property manager (can't even imagine)?
I'm positive that @Rob K. qualifies (though not sure about point #3??), but he is also a hands-on management pro and admits that property mgrs have been a bust when he's tried them. Anyone else?
Thanks for the kind words, David. I do meet points #1 & #2. As far as #3, I've never thought about bludgeoning myself, but I have on occassion wanted to show a tenant what elbows do to teeth.
I wouldn't say that I've "enjoyed" managing these properties, although I have a lifetime of funny stories that never cease to amaze those who aren't in this business. The most frustrating part is dealing with people who just don't get it.
I have found an area that I would consider to be a "B" neighborghood. Low crime and hardworking people. No abandoned houses or grafiti. Very little Section 8. The downside is that the schools are bad. Still, I've purchased three houses in that area in the last year. They all have three bedrooms and a basement. Two have central air and garages. Those two were purchased for $30K and $36K and are both rented for $955. The other one has no garage and was purchased a month ago for $31K. It is up for rent for $895. Still good numbers with few problems. These prices are slightly higher than the $30K that has been discussed.
I do have two houses on the same street that were purchased in 2009 for $5K each. Those are both two bedroom houses on crawl spaces. They are in a neighborhood I would describe as C-. High property crime, but low violent crime. Horrible schools. The majority of applicants get rejected. I carry a gun and don't like to go there at night. Those houses are both rented for $575 and $590 and are relatively low maintenance. One tenant is Section 8, lives like a pig, but doesn;t cause me any grief. The other tenant pays the rent, but always late with the water bill.
Most of my other houses are in B- and C+ type areas. I do have a house in an A neighborhood with good schools. I get great rent for it and the tenant never bothers me. In the future, I plan to buy more of those type houses. The cash flow is lower, but less drama.
I have one house that was purchased in 2010 for $8,600. All it needed was a roof and a paint job. The hardwood floors were beat up, but I left them as-is. The first people to look at it took it for $725. They are still there and the rent has paid back every dime I put into the house, plus all of the taxes, insurance, and repairs, plus an extra $7,300 in my pocket. The house is probably worth $30K, which would be all profit. The house is in a bad area and I don't like my tenants. They pay the rent, but they are very rude people. Fortunately, they only call if there's a real problem. If and when they move, I will probably sell the house. In the meantime, I will just collect money from it every month.
As far as property managers, I know two that work in the same class C area I have a lot of rentals in. Both have told me on seperate occassions that their average days on market is 60, which I believe. It's hard to find decent tenants in those areas. I wouldn't think about turning my houses over to them. I will sell them when values go a little higher.
To do it all over again, I would still buy the cheaper houses. It's an easy way to build wealth. If you can buy houses for $30K and make good returns without getting murdered or having your furnace stolen, I would go for it. Just stay out of war zones. It's not worth the risk.
- Wholesaler · Lenoir, NC · Member since 2013 · 297 posts · 127 votes12y
@David Beard I have been doing this for 4 years and I am good with 1 and 2 but I think that most people have wants to get rid of certain tenants. But I have some that were gold. My father has been renting out these sub30k homes since 1985. I remember him buying a home for $5000 dollars back then. He has 11 now and has been renting them out ever since.
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