Recently I have been looking at rental property in the Spokane area and I am shocked to see some of the prices. The homes I am looking at are extremely cheap compared to those in my area. For example, I am looking at a triplex for 99,000 that doesn't seem distressed by any means. This is not a rarity, either, it seems like. Properties like this are plentiful on multiple listing sites. I'm not from the area so is there something I am missing here? Are these prices based solely on location?
Hey @Andrew Vargas , I'd be interested in chatting more about specific properties you are seeing, and may be able to help shed light on the neighborhoods, etc. Send me a message!
As David mentioned, do your due diligence! There are quite a few areas in Spokane that have nice looking Craftsman or Victorian homes, but many investors wouldn't even walk the sidewalk let alone own property.
I can't speak for Spokane as I'm unfamiliar with the market. However, I would warn that just because something is relatively cheap does NOT necessarily mean that it will be a better investment than the more expensive property. I think you are right to question why. I don't know the answer in this case but would advise to look at the class, stability, of the tenant base and correspondingly the work involved in being a landlord there and consistency (not just quantity) of income and expenses compared to the more expensive neighborhoods. I'd also look at how Spokane rentals and prices held up in the great recession vs. the more expensive neighborhood.
By way of analogy, I saw a similar phenominon in my market ... in LA proper, houses were going for $750k and 2 hours up the road in Antelope Valley similar houses were going for $350k. When the great recession hit, those $750k houses got knocked down to $550k and the renters held steady and solid. In the Antelope Valley, those $300k houses got knocked down to $100k, the renters stopped paying rent, and vacancies went through the roof. That was fine by me, as I held my $550k property and snatched up a few $100k properties in the fire sale from the bank. Now that the market has recovered, I'm seriously considering 1031 exchanging those Antelope Valley properties to more expensive and stable markets closer to me so I don't need to ride the roller coaster back down, though I'll be fine either way. People always automatically assume that the higher cash flow markets have less volatility or that cash flow alone is some magic bullet that will save an investor in a downturn, but in this example it was definitely not the case. Nothing wrong with investing in lower end markets like the AV, it has worked out great for me, I just prefer to buy them when they are on a fire sale. I'm not saying Spokane is like this, just a real life example to give you stuff to look out for, investigate further, and think about ...
Spokane can be a very interesting market. I would say even through the recession that property didn't lose value as hard as others. It's a solid market that usually declines after areas like Seattle.
Regardless of what the market is doing, it's always important to get the buy right.
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