Anyone out there specializing in under 30k properties?

Innovative Strategies
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Anyone out there specializing in under 30k properties?

Douglas B.
Buffalo, NY · Member since 2014 · 82 posts · 75 votes

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!

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Elizabeth S.
Real Estate Investor · Fort Wayne, IN · Member since 2013 · 168 posts · 78 votes
12y

I 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.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Douglas B. Many have tried and many have failed with what your describing, I have a friend in Oregon that bought a 80 unit buidling in Memphis,, I told him don't do it.. " he basically said the exact same thing as you" give the tenant a quality unit try to get the best tenant etc etc.. Well they just sold and lost 400k on that one. they did all the rehab put in new play structure ( destroyed within 2 weeks. ) Bball hoops destroyed in a week.. BBG pits fights and shootings when the tenants went at it....

    Personally I think if you want those really cheap type units you need to get out into the country.. find small little towns ( they are all over the midwest) Rents will be much lower but you will probably get them and your properties won't get trashed.

    I have done some bizz in Kokomo IN.. thats a nice little city an hour from big city. nothing much happens but. I have never had a break in or any of the other issues you get from inner city Section 8... But I guess if you can live there and handle it you can give it a go.. those that live out of state and try it by and large get wiped out over time

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  • Craig Montesano
    Investor · Northwest, PA · Member since 2013 · 107 posts · 24 votes
    12y

    ill throw my hat in....

    This is great!!

    Im a buy and hold sfr guy. $40 k and below with minimal rehab. If its more than some carpet and paint, im passing. Just about to close on our 7th house at 35k sale price. 3 bed 1 1/2 bath with a fenced in yard. 3 bedrooms need painted and it has an older furnace which should have about 5 years left. Our houses rent anywhere from $600 to $695 a month with low property taxes and are within a 5 minute drive.

    Craig

    1Reply
  • Raymond B.
    FL · Member since 2009 · 2k+ posts · 357 votes
    12y

    @Derrick Craig,

    To make the @ work, do the following:

    Hold down the shift key and type @?

    Look below this Window, and you will see a list of names of people that have posted in this thread.

    Click on the name of the person that you want notified via an email, that you responded to them.

    If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name.

    Then look below this Window and click on that person's name.

    Raymond

    1Reply
  • Derrick Craig
    Memphis, TN · Member since 2013 · 969 posts · 524 votes
    12y

    @Raymond B.

    Thanks I did not realize that..

    0Reply
  • Account Closed
    Newmarket, Ontario · Member since 2012 · 4 posts · 0 votes
    12y

    I bought 3 SFR that are tenanted for less than 50k. Rehabbed about 10k. So total invested was 60k. You can say 20k each. Gross rent is $23,400 annually. Property tax for all 3 is about $2500 so just above 10% of gross.

    You would think this is a shady neighborhood but the crime and vacancy rates are about US average.

    You really need to know the area and drive through it a couple of times.

    I wouldn't mind buying something less than 30K as long as

    The crime rate is not high

    Lower family income is ok as long as the poverty level is very low. When my PM shows me a rental application I make sure they make 2.5x the rent per month for approval.

    This price point is the best for holds especially if you plan on holding for 3+ years. Sweet cash flow..

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @James Ross for those that live in the market and treat it as a business it works.. were this falls down is when someone from AU or CA buys one and has to rely on PM that this all falls down.. If I lived in your area or any area of the mid west I would do what you do and own 5 thousand of these and crate a whole buisness out of it and never deal with anyone below general manager :)

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by @James Ross:
    I have been buying in that price range (Warren, hazel Park, Eastpointe, MI) for the last 7 years and I can tell you yes there is a little more B.S. You have to put up with. But the returns are a lot better than when I buy in Royal Oak, Clawson etc. "Good" areas.
    In December I purchased four houses. Two of the houses were 25k each tenant occupied rent for $700/mo. One was 27k north of 696 in warren(6k repairs) rents for $800. And the last one cost 21k(12k invested) will rent for $925-950.

    Last week I picked up a rental for $1500.00 (it came with a harley in the garage) hahah in warren and will put about 12-18k in repairs. it also will rent for around $925-$950.

    Now I would have a little more work in these market areas but with over 70+ properties in all different markets around Detroit (north of the city) I would take the returns with a little more bs.

    I have had problems with renters in "good" areas and bad but it's a great trade off for me to stay in the below 30-40k markets and have more streams of rental incomes.

    All the time I read on here people putting down the lower end of the market saying that there is too many headaches with that area you can't get good returns, your going to get shot. I say good you stay where you are comfortable and my friends and I will enjoy this part of the real estate market.

    Sorry for going on for so long I am on vacation and doing a little drinking catching up on some reading on BP. Just my two cents...

    Jim

    I am very much looking forward to moving to Ohio and have scheduled to go out to Michigan and look into the areas. Those numbers quoted above are very interesting.

    I also like that Detroit and Michigan have a huge stigma so most investors are fearful and have just crossed it off the list.

    I genuinely believe that having the right team on the ground and buying in an area that was predominantly owner occupied could be a very good and sustainable investment.

    Thanks

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  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by @Jay Hinrichs:
    @Douglas B. Many have tried and many have failed with what your describing, I have a friend in Oregon that bought a 80 unit buidling in Memphis,, I told him don't do it.. " he basically said the exact same thing as you" give the tenant a quality unit try to get the best tenant etc etc.. Well they just sold and lost 400k on that one. they did all the rehab put in new play structure ( destroyed within 2 weeks. ) Bball hoops destroyed in a week.. BBG pits fights and shootings when the tenants went at it....

    Personally I think if you want those really cheap type units you need to get out into the country.. find small little towns ( they are all over the midwest) Rents will be much lower but you will probably get them and your properties won't get trashed.

    I have done some bizz in Kokomo IN.. thats a nice little city an hour from big city. nothing much happens but. I have never had a break in or any of the other issues you get from inner city Section 8... But I guess if you can live there and handle it you can give it a go.. those that live out of state and try it by and large get wiped out over time

    Jay,

    What are the numbers on an average deal in Kokomo?

    Thanks

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  • James Ross
    Involved In Real Estate · Harsens Island, MI · Member since 2011 · 36 posts · 17 votes
    12y

    @Jay Hinrichs I manage other people property and have no problems and they are very happy with the returns they are getting on the rentals.

    0Reply
  • Raymond B.
    FL · Member since 2009 · 2k+ posts · 357 votes
    12y

    @James Ross

    To make the @ work, do the following:

    Hold down the shift key and type @?

    Look below this Window, and you will see a list of names of people that have posted in this thread.

    Click on the name of the person that you want notified via an email, that you responded to them.

    If you are a Colleague with anyone that has NOT posted in the thread, and you want them to see your post, hold down the shift key, type the @ and the first 4 letters of their First or Last Name.

    Then look below this Window and click on that person's name.

    Raymond

    0Reply
  • Kizzy Robb
    Investor · Saint Louis, MO · Member since 2013 · 87 posts · 32 votes
    12y

    This is a good topic and allows me to reconsider things as I head into purchasing my first investment properity this fall. I've been looking at multi-family units at the price point of 60k - 99k. I should consider lower price points and rehab cost as well going forward.

    1Reply
  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    12y

    @Kizzy Robb

    Another good resource beside biggerpockets is sub30k ( Lisa Phillips )

    Go to Youtube and look for ' sub30k '

    Good luck moving forward.

    Disclaimer: no affiliates with sub30k

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by @Ramon Jenkins:
    @Kizzy Robb

    Another good resource beside biggerpockets is sub30k ( Lisa Phillips )

    Go to Youtube and look for ' sub30k '

    Good luck moving forward.

    Disclaimer: no affiliates with sub30k

    Just did a video with Lisa.

    Very much enjoyed her passion and energy.

    Thanks

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  • Lee Smith
    Residential Real Estate Broker · Indianapolis, IN · Member since 2009 · 477 posts · 304 votes
    12y

    I work in Indianapolis market, and we have quite a few of these properties.. I find the sweet spot currently is in duplexes and triplexes.. We can generally be in for 20k per unit, and the returns are 15+ cap rates with 30-35% assumptions for property management, vacancies, annual repairs, etc....

    It's definitely about the areas you are buying in and the management. I manage for several investors and we generally have pretty good luck.. Most of the time when I have issues, it's with existing tenants that we get when we buy a house.

    Indianapolis has a Crime statistics website that we use for every lead... We generally filter our leads for quarter mile radius of subject property and crimes over the past 6 months.

    We generally buy the blight of neighborhoods and put money into rehabbing them and fixing them up. Obviously the numbers have to work though. We pass on way more than we buy currently.

    1Reply
  • Steve Sanchez
    Investor · Peoria, IL · Member since 2014 · 76 posts · 44 votes
    12y

    I'm in Peoria and buy and hold here in the very low income areas. I find my best deals and best ROI in those niches. Example, I have two side by side 3 Br 1Ba homes that I rehabbed and all in I'm at about 15k for each one. They both rent for $700 a month and tenants pay for all utilities etc.

    This is my niche now and I just closed on my 6th SFR here on Wednesday.

    I'm (so far) very happy with the deals I've been putting together!

    -Steve

    2Reply
  • Steven Sample
    Duplex Investor · Coolidge, AZ · Member since 2013 · 34 posts · 8 votes
    12y

    I have purchase all of my properties under the 30k price range. I also have a rent range from $625-$900 a month. Nevertheless, count me in....I know there many many properties out there in this price range...

    0Reply
  • TALAL PHAROAN
    Involved In Real Estate · Lutherville Timonium, MD · Member since 2014 · 14 posts · 1 vote
    12y

    Great topic! Has anyone here weighed the benefits and losses against mobile home investments and doing sales on mobile homes for payments? If I were to spend 180k cash to buy rentals in Baltimore city i could get about 6 properties and get about 700-800/mo each and GOI about 54k a year IF all are occupied.

    I could also work with Fedro and other mobile home investors on controlling mobile homes and selling the via payments and not have the responsibility of repairs. I currently have the option to stay in Baltimore where where Cash Cows are plentiful or move back to Seattle where mobile homes are plentiful. Any takes?

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y

    Just offered $20,000 on a 4 bed, 2 story in Toledo.

    Sold for $126,000 in 2004 and 2 most recent comps (2012) in the area sold to owner occupiers in the $90,000 range.

    Will send pics if I get offer accepted lol. Needs a bit of work.

    Might move into this one lol

    Thanks

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  • Rick Baggenstoss
    Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    12y

    @Engelo Rumora sounds like a great deal.  hope you get it.

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by @Rick Baggenstoss:

    @Engelo Rumora sounds like a great deal.  hope you get it.

    Thanks Rick,

    Its one of those deals that come across 3-4 times per year lol

    Should know over the next few days.

    Thanks and have a great day.

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  • Ramon Jenkins
    Real Estate Agent · Milwaukee County, WI · Member since 2009 · 3k+ posts · 525 votes
    12y

    Engelo good luck on offer to purchase

    1Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    Can't wait to see the pictures of your successful bid.

    Best wishes!

    1Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y

    @Ramon Jenkins@Pyrrha Rivers 

    Thanks guys and much appreciated.

    Just about to call my contact that is direct to the fund.

    It is a long shot but its all about the numbers. I am sure I will get 1 out of 100 :)

    Have a great day.

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  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    We're waiting to hear your news!

    0Reply
  • Engelo RumoraBusiness Member
    Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
    12y
    Originally posted by @Pyrrha Rivers:

    We're waiting to hear your news!

     Left a voicemail lol

    We shall see. If I do get it across the line I will happily post a video and some pictures and prove the comps also :)

    Thanks

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