Buying Real Estate -- Mid -Low End vs High End
The past few months I have been researching buying property. I have a full time job and I am debt free. Next step is to buy rental property. After researching I am thinking changing my strategy to target properties that are in the re-sale range of $65K - $80K range instead of $150K -$200K range.
I can acquire a $70K house for about 30% - 40% (about $30K) then rent it out for $700 -$1000. Or I can buy a $150K house for about $100K then rent it out for $1200 -$1700.
It makes more sense to me to look at the Mid/Low End houses because there seems to be more profit in them and the ROI is a lot quicker. Granted this goes along with the tenant I put in it.
Does it make sense to anyone or Am I looking at this wrong?
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- Realtor, General Contractor, and Developer
- Redding, CA
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Nick Weidner the definition of market value is what a willling seller and willing buyer come to terms on. If you purchase a home for $30,000 and other similar homes in the neighborhood have sold for more, establishing value, then you were lucky and purchased below market value and have a great deal. On the other hand, if a large number of homes in the neighborhood have been foreclosed on and sold in the $30,000 range, until someone starts fixing them up and reselling for higher numbers, you have purchased a home at its current market value. If that neighborhood has potential to command higher sales prices once foreclosed properties are rehabbed and resold, then it can be a good deal. That's where doing your homework, and KNOWING your market comes in.
- Karen Margrave