Memphis - buy renovated home for 65K or original home for $30k?
Hi All,
Like many others, I have been doing research preparing to begin my first REI with a SFH in Memphis, TN (because properties here on Maui are too expensive for regular guys with regular salaries like me!) I've been fascinated with REI since I became an appraiser out of high school in 2002 and have been dying to get started since, but always convinced myself I didn't have the capital to do it. Well now I have a little bit of savings after working hard and saving like crazy for a LONG time and I've decided to buy a home cash in Memphis so that I have less risk (vacancies, HOA fees, mortgage payments, etc. all scare me, being a newbie, so I see this as the lowest risk way to get started because even if the home sits vacant for a year I would only have to pay taxes and insurance).
I'm currently comparing buying a home for around $30,000 that has not really been renovated and rents for around $600 VS. a home for around $65,000 that has top to bottom renovations and rents for around $750 ( possibly through a REI company like Mid South Home Buyers, Memphis Invest, etc., or just finding one on my own through an agent). Obviously I would expect higher maintenance costs; but let's figure instead of an average of $30 a month on maintenance I may have to spend $90 or even if it was $120 a month on maintenance, I still see the $30,000 house as a better ROI... am I missing something?
I'm also curious if anyone with experience in multiple markets has any suggestions as to whether another market might be best for my situation and trying to start off with the smallest possible out of pocket investment? I only happen to be looking at Memphis because another investor suggested it and I can afford to buy a home cash (not a renovated one though!)
Hope my questions don't sound dumb, but I gotta start somewhere, right?? Thank you all in anticipation for your feedback!
