The $30k Rental Property: How to Finance & Profit From Cheap Real Estate


Like fire bolts out of the sky, there have been quite a few posts (or should I say daggers) thrown around the #biggerpocketsphere (yes, you heard this term here first, folks…) about the 2% rule or 1% rule or whether you should buy under $30k or over $30k. Or “I am a better investor because I am taller than you” (I am well over 6 foot, so probably — and I can actually reach the roof if I am on an incline on the side of a ranch house that is headed up hill). Or “My investment makes .09374% over yours,” or “My paint color is actually far superior to yours; let’s be honest, mine is obviously better.”

Why? Because it’s mine.

Welp. That cleared it up.

Or maybe not.

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Why I Like the $30k Investment Property

You see, I initially chose to buy houses in the $30k range because it was an area I understood, they were houses I could afford, and the rate of returns on the properties were solid — in the 2% range.

None of this tells the whole picture. A point many of these posts make is that any place you can buy a $30k house, you can probably buy crack, get shot at, and most likely not walk around after dark — or at all without guns and a bodyguard. I can’t speak for every square block of the continental United States, but I can speak to this:

  1. I have owned houses that cost more than $30k that were in terrible neighborhoods that I regretted buying.
  2. I have owned houses that cost more than $30k that were in great neighborhoods.
  3. I have owned houses that cost less than $30k that were in great neighborhoods.

I can also say, now that I know the neighborhoods to buy in, I haven’t bought a house recently at this price point that wasn’t safe, that wasn’t a solid house, that was in a “bad” area of town, and that didn’t make a great return on investment. The one I just bought a few months ago was $26k, and I put about $5k into it. It’s cute as a button, and my management company calls it “the dollhouse.”

As far as the tenants, they pay on time (usually), everything is ACH transferred, and I receive the funds to my bank account.

Related: Newbies Take Note: You STILL Shouldn’t Buy Houses for $30,000

After thinking through what some may deem the armpit of the real estate investment world, let me help clear up a few things if you find yourself looking at this price point, interested in making 20-25% ROI, and you can’t figure out if you should pull the trigger or not.

3 Keys to Succeeding With a $30k Rental Property

1. Understand: it’s $30k… Not $300k or $3m

Guess what, I don’t put granite in my $30k rental houses! I know… crazy, you say. And I also don’t put high end finishes or finely crafted vanities or cabinets.

I DO do the following: make sure the roof is in great condition, as well as all other major expense things, like the HVAC, plumbing system, and electrical system — and I have those things built into my purchase and renovation at the beginning of the project. We make sure the property is clean. We have started to put in tub surrounds and new plumbing lines to the shower/tub. The surround is relatively cheap; we are able to check the plumbing in the bathroom at that time, and the surrounding is easily fixable if there is an issue. We also put money into good, working toilets, faucets, and anything that nickel and dimes us with maintenance later.

Also keep in mind, $30k here in the Midwest is definitely different than $30k in South Florida, or San Diego, or Orange County, or Maui. It’s not the prince’s palace. But it’s a house, a pretty decent house. I can’t buy a house with a bad roof and a broken basement in this price range; it doesn’t make finance sense. But I can put a roof on a house in this range if the kitchen and bathrooms are in okay shape and the house needs things more like paint, carpet or vinyl flooring.

2. Know that Paying $30k Doesn’t Mean You Should Buy in Bad Areas

My properties are in areas where I have driven, chatted up neighbors, walked, and spent a lot of time doing the “homework.”

Understand the demographic who lives in the surrounding blocks of the subject house you are interested in and what the ebb and flow of the neighborhood is. Sometimes it’s simple: it’s families in the neighborhood, and they don’t make a lot of money. It doesn’t mean they don’t take care of their properties, or they aren’t good people. These kinds of neighborhoods can have terrible pockets with a few blocks you don’t want to buy on, or the reverse.

Also keep in mind that for places where there is only a small area that is in good condition, it is more likely that the area can slip quickly into a neighborhood you wouldn’t want to be in if a few more houses become vacant or tenants and owners stop taking care of the properties.

The bad areas of town provide even higher ROI, but there is often active gang activity, higher criminal incidents, and having owned properties in some of these neighborhoods (in my earlier days… I don’t buy there anymore), I also felt the quality of tenant was not great in terms of them caring for the property, and I ended up dealing with costs associated with tenant turnover. I did read the book The Section 8 Bible, and good for those guys. It wasn’t for me.

3. Aim to Set a Precedent With a Nicer House Than the Average in the Neighborhood

The last few properties we have done, I’ve spent just a little more time and a little more money on them. We are talking a LITTLE bit of money, as well as a little creativity. The reasoning was, looking at the surrounding comparable properties, I felt that we could get a better tenant — and make more money in the long run — if we made it a little nicer. With the caveat that I don’t believe this is true in all areas, you need to make sure you think through this proposition. In the section 8 houses I used to own, this was not typically the case, and I spent a lot of unnecessary money.

When you or the property manager meet with the renters, explain your philosophy. It’s a great house, and we have done “x,y, and z” to make sure that all the systems in the house are working. And it’s well insulated, so your utilities will be low, and it has a grand new _____ ,_____ , and  _____.  And our expectation is that when you move out, the walls look as good as they do now, and the carpet is easily cleaned, or you will be paying for these things to be fixed/replaced.

Maintenance is an ROI killer. I have learned this the hard way. We need to stay more on top of issues in these houses because they are typically older, and things do break. Make sure you are in the property a few times a year, and make sure you are communicating with the tenants about what is going on. Explain to them it is not a bad thing for them to call you; you want to know if there is an issue.

Related: Don’t Buy That Cheap Property! (UNLESS…)

Now, on to the lending.

Both Creative Financing and Bank Financing Work

There are two ways I have purchased these properties.

Private Mortgage

I put down 30%, and the private mortgage holder had a first lien position mortgage. In this area, I paid about 10% interest on the mortgage, and it was a 30 yr AM (amortized over 30 years) with a 3 year balloon.

Bank Financed

Yes, I know. There are a lot of banks that don’t touch anything under $50k or $75k. But there are many that do.

Here is the secret: Pick up your telephone.

Community banks, credit unions, and nearly any bank that makes local underwriting decisions (so far that I have found) has been able to do whatever loan amount they wanted. And even better, it is typically on the lower end of the mortgage person’s approval amount; as in, the mortgage person has an approval amount they can do themselves, and then typically the branch VP or President will have an amount much greater than the mortgage banker, and they can approve up to that amount in house. One who I know can approve up to $250k in house.

With the banker, you are paying rates above the owner occupant, but I just got a mortgage on a house for 5.5% and 1 point — for a $30k loan balance. Tell me that ain’t sweet! Yeah, it is.

So there are ways to fund and finance these properties besides cash. Ask your lender how they like the property. Maybe the bank doesn’t want to fund the deal until the property is fixed and rented. No problem — have your private or hard money person fund it, fix it, get it rented, and refinance the property. Give your banker as much information as possible at the beginning of the transaction, and keep them up to date on everything that is happening.

Happy buying! Properties at the $30k mark will remain in my rental portfolio for the foreseeable future.

What kind of properties are you buying, and what is your target property, hold timeframe, and ROI requirement?

Let’s talk $30k investments in the comments below!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.


  1. David Semer

    @Nathan Brooks Great article. This is very timely. I am thinking of holding my first rental property that i currently have under contract. I have done mostly Fix and flip. Having a hard time figuring out how to rehab it as to not over rehab but avoid least amount headaches down the road. Would you add a central Air conditioner if the house already had a forced hot air system? I am in the Central Jersey Market and the house is only 600 sq ft. thanks for the advice. Kind regards, David

    • Nathan Brooks

      Hi David … I would consider if the comparable properties have the central AC. Generally my units all have the central AC, I have owned some that had old or inadequate central units, and additional window units. I have a great HVAC guy and the prices are pretty reasonable. If it was cost effective, and you have the budget (and make sure you check the duckwork/etc before just pulling the trigger) I would probably just do it. Good luck!

  2. Nathan,

    I really appreciated your blog on this subject, since I am about to embark on building my portfolio of rentals in this price range. There are always skeptics in this price range, but to me, it’s one of the best opportunities. As in anything, understanding, being prepared, and then following through is key

    Here’s why I like $30,000 rental houses. If an individual finds the right bank(s), the lending on these is virtually endless. All you need is enough money for your first house. You buy, fix it up (if needed), rent it out and put a loan or equity line on it and go on to the next. If you buy it right, the house should appraise for at least $50,000 and you should be able to pull out all your money to repeat the process over and over again. The monthly cash flow per house is not huge when you mortgage the house for $30,000, but who cares. If the bank understands your plan, they will lend over and over, and soon you will have a large portfolio with adequate cash flow. There are banks that understand what we are doing and will lend in this manner. The key is tracking them down and proving to them that this is a good investment.

    The tough part for me will be staying afloat during the initial building period before cash flow really kicks in from owning multiple properties. I might have to include a pay myself fee every time I buy a house, which will come out of $30000 mortgage/line of credit.

    Nathan, what is your opinion on finding the properties? Do you market and buy direct from sellers, from wholesalers, or from the MLS? Right now, I am having trouble producing my own leads, so I am thinking about getting them from others.


    • Nathan Brooks

      Don … I totally agree with the model, and how you suggest here. My thing has been, I had to be patient in the building/acquisition process. So we haven’t bought a ton of properties at once. We are looking to buy 4-6 this next year (rentals). The staying afloat part absolutely should be at least cash reserve, or fund you can build in from your bank note. For me, I had the cash to fix and hold for the month or two to get it rented. I feel much safer that way.

      I buy wholesale, mls, and some seller financed from other investors. Find the good ones … it’s just patience and persistence. Hope that helps!

  3. Chi Cheung

    I invest in SFRs in this price range as well. I found a national lender (bank) that has no minimums from the BiggerPockets market place. There is cost of obtaining the loan such as appraisals, title company, flood insurance, and other closing costs. But I think it’s still a good deal compared to hard money. The APR for my last loan was about 5%. I’m not sure if I’m allowed to mention contact info here. Search the market place, or send me a note.

    • Nathan Brooks

      Thanks Ndy, yeah … I am not sure about the NY market, but there are definitely multiple midwest cities that do these. Expect to pay $45-60k for these same houses from the bigger companies who are selling them turn key … still now a bad ROI.

      • Bob E.

        I agree with the TK pricing of 45-60k. We have offered at least one for sale and we were looking for the lower end of that price range (willing to do owner financing for half). No takers yet so we are just cash flowing it for now and may look to put financing on it.

        We get another one next week In Milwaukee after we get the former owner out, Our agent walked through the property and to looks really nice with an updated kitchen, we will be all in for @ 15k and expect $850 if we rent it. The problem with this one is it is so nice we might just resell it. AVM shows at 55k so a nice sale with owner financing wold generate long term revenue without the management fees or maintenance headache.

        And we bought a second REO in Lansing Michigan today (we got our first one a few months ago), bought it for 5k + $7900 in taxes (Michigan is a high tax state). Our PM walked the property after rehab we will be in for 20k should rent for $725 but we are considering if we want to sell or hold, AVM shows as 90k, BPO is for 20k, a really big range. We are considering doing a Ready 4 Remodel sale on it but will see. I think we can get top dollar from a 203k buyer but we need to spend more time working this one.

  4. Adam Smith

    Great article Nathan. I’m just dipping into this market segment and I haven’t done any borrowing yet, so it’s really heartening to hear that you’re having success with it. Do you have any tips about who to talk to at the banks or what questions to ask? I find a lot of bankers clam up when I start talking about relatively unconventional investing like this.

    Thanks again for writing.

    • Nathan Brooks

      Hi Adam, my best advice is to have a deal together and ready to go. Have cash in your bank account, and be ready to pull the trigger. Sit with the VP or President, whoever you can get a meeting with, and tell them what you do. Ask what they need for them to say yes … how much down, how much time to close, etc … if they clam up, ask a few questions and make sure they understand you aren’t a slum lord, if they don’t dig it, move on! Keep asking until you find someone that says yes.

      • Adam Smith

        Thanks for the tips. I can do that. I should be closing my first rental with cash this week or next, I think showing a track record will be a big help, as will bringin gin specific deals rather than speaking in the abstract. Best of luck,


  5. Graham Bates

    I am UK based and looking to invest in a property in the US to rent out. What states/ county can you recommend for getting $30k properties, in a good state of repair that will not have any trouble being rented out? To get them at this price are they generally forclosures/ reposessions?

  6. Ken p.

    We’ve had success in financing under $30k condos via land contracts. We’ve been offering about 20% down and the balance over 4 to 5 years at 5%. At those terms there is no cash flow for the term of the loan, but afterwards we own the property free and clear and cash flow around $350/mo.

  7. Thanks for the information! We currently own a few homes (with plans of more) in the under $30K range…one we are considering has dropped to $14,500 (we need to walk through yet), but it is beside another current property of ours (other homes on the street list or sell at $25K, so not sure what awaits us…). Part of the issue we believe is the home is oil; for $3,500-$4,000 we can get gas furnace installed/converted. Any thoughts on something of that nature on homes in this price range? Assuming minor cosmetics otherwise? We have another home with oil heat that we drop rent ($75/month) for Dec.-thru Jan.

    Thank-you for your time!

  8. Another added value of this type of strategy (at least in my neck of the woods and why this has been my bread and butter) is that it offers several exit opportunities. Rent, sell, land contract. If I have to sit on them for a few months, which I often have to do because of the other job. It won’t break me!

  9. Derrick Craig

    GREAT JOB NATHAN!!! The $30k home is my BREAD and BUTTER, I also have homes and apartments that I paid much much more than $30k for but overall my $30k and below investment properties OUTPERFORM all of them put together. CASH FLOW, ROI, 2% come on try 10% or more.. @Nathan Brooks thank you soo much for voicing the opinions in such a great forum/manner. Be ready because the naysayers are lurking and will also chime in saying this is bad and the worst investment any one can get into.. Blah blah blah blah..


    • Nathan Brooks

      Hey Derrick! Thanks man … yes, this is my bread and butter too! I am sorry I mis-stated the ROI … I meant 2% rule … like $40k house, $800 in rent (or more) … so yes, absolutely over 10% ROI, more like 17-20% + …. it’s all good on the naysayers. The whole value here is there are nearly 50 comments already, and all of these fine people are making great money DOING it. That works for me.

  10. I have had good luck getting loans for smaller amounts by taking a blanket loan for more than one property. You might try asking your bank if this is an option. The commercial lending guy at our bank likes to do loans for a larger amount, so I purchased two $30,000 homes on a line of credit, spent some money to fix them up, and took out a $75,000 loan to cover the purchase and the fix up costs on those houses and had money left over to fix up a third house that I am flipping. The two $30,000 houses appraised around $120,000 after the fix-up, so the bank had no problem loaning $75,000.

    • Nathan Brooks

      Hi Michelle, that is definitely something people can do. I know some people don’t like to collateralize … so that would be the only question for the investor to ask themselves. But I like the idea of buying it on the HELOC, fixing, and then having more control getting what you want lending wise from your bank. Very good!

  11. Robert Szalay

    Thanks for the article. I’m a newbie and just got my first property, a duplex in the Detroit metro area for 37k. Many of the SFR in the area are about that range so i feel it was a good deal. Haven’t gotten it rented yet because the prep is going a little slow but have one tenant moving in on the 15th hopefully. Going to be rented for 650 each and the guy moving in on giving him 500 off of first month for painting both units so I won’t see cash flow until next month.

  12. matt b.

    This is some really good and inspiring stuff! It seems like you invest locally for properties under 30k. Do you think this strategy can be used successfully for out of state investors? I have heard from some people to buy minimum of B class properties to avoid issues with lower quality tenants.
    Also (sorry if you already answered this) but where do you have most luck finding your 30 k properties? MLS, wholesale, auction, private sellers? Thanks!

    • Barbara Long

      Matt B. I’m finding NOT lower class of tenants in this lower end K. I’ m finding well off people are down sizing to be able to do more traveling and vacationing without owning or renting a huge home. I live in Pa retire ppl are looking for this kind of home. the are hot on the market!

    • Nathan Brooks

      Matt B … I do think you CAN do this out of state. I know there are several people (myself included) who do these kinds of properties, and have various systems in place to handle them. I am mainly finding these on the MLS … but also through tax sales, and working on some wholesale deals as well.

    • Nathan Brooks

      Hi Sergiu … the guys I am typically working with are the loan officers or VP of a specific bank. I am not sure if they would be calling themselves mortgage bankers … I know the titles of the two I use, and they aren’t that title. The best thing I have found is the direct lending/underwriting that is local … that’s by far the best. Look the person in the eye, and make decisions there. Good luck!

  13. Ken A.

    Everyone will be shocked at the much higher prices by 2022-2024. Gains will be higher in the better areas. What can actually drag the “gains” are the stagnant areas that will never go up. Don’t invest there. The Biggest points for MUCH higher prices (since 2012) are

    1. Too much demand chasing too little “retail” ready supply (Hello Economics 101). 2. Interest rates around 4%. Are you kidding me – Have you looked at the last 50-60 years-that is way too low and makes it much more affordable. 3. GREED – This will push Better Real Estate much higher – IT NEVER FAILS. There is way way way too much CASH on the sidelines – THEY ALWAYS chase higher yields.

    I don’t know what #3 above will exactly look like. It could be Crazy Investor Loans – giving loans on investment Real Estate packaged by Wall Street (think about the Stupid Loans they gave to Home Owners – So why not Stupid Loans to Investors eventually – just a thought.

    Watch how the FED always mentions Housing Prices, etc. The Gov’t will probably want to find a way to get banks, etc. to make loans. The Government actually LOVES INFLATION. Don’t be fooled. They (gov’t) can then pay off their debt with cheaper money.

    I’ll be selling pretty much everything in 2022-2024 as GREED BUBBLE inflates.

    I’m still buying $30K homes with $700-$800 rents. That’s my niche. These homes used to sell for $100K+ during bubble. History may not repeat, but it will probably Rhyme.

  14. John C.

    I bought 2 houses in the end of 2012. I though tax auction for $6010. Put in $6K and rented for $800 for a little over a yr. and then sold it for $35K. Other one was bought for $12,300 and put in about $6K. Rented for $800 and sold in about 1.5 yrs. for $55K. Sold both in 2014. The market here in SE Michigan has increased and so we will see what kind of deals to be had. Just bought our own house in foreclosure and got a good deal so I’ve been busy renovating it but should appraise about $30K -$50K more once we are done but will be living in it. Then will be looking for more deals but I am still looking for private money or bank financing for these small $30K houses. I will probably find, fix, rent, and then sell within 2 yrs. So, if you have a contact for lending please let me know. Thanks!

  15. Brandon Phillips

    I bought a duplex in a “poorer” part of town, but the people are good and the crime isn’t bad. $30K cash and I inherited two good tenants. I pulled about $25K out with a commercial loan to invest in other properties and I put about 5K back into the place for new windows, baseboard heaters and some other fixes. As of right now I am sitting about about 27% ROI, I was hoping for closer to 35%, also cash flow of about $400 per month. So the numbers look nice in theory, but I’m starting to wonder if $400 per month is enough for the hastle I have to go through with the occasional call and time I spend running out there to fix a toliet or sink.

  16. Clayton Buchanan on

    Just completed my first purchase of a 30K home in the Jacksonville, Florida area. Once rehab is completed it will appraise for 55-60K but I am having the same problem finding a bank to cash out and repeat the process. Anyone know a bank in this area?

  17. Yany Rivera

    Thanks for the article Nathan! I have a couple of properties just above the 40k price and completely agree with you that these properties can be good rentals and is not a reflection of the neighborhood being in decline. Its just the median price of the entire area.

  18. Joe Canfield

    I started buying in this segment in early 2015. I have 15 properties/22 doors.

    My properties will be very profitable over the long term because I buy them right, pay cash for everything, control costs while providing quality place to live for folks, and develop good relationships with all my tenants.

    It’s not rocket science – it’s real estate. Don’t let the numbers or analysis paralyze you.

    Take action. If that action doesn’t deliver the result you want, take different action.

  19. Lisa Phillips

    Nice! Nathan – is the stigma finally gone! Do I have a sergeant in arms for the Sub30k Income Warrior Brigade?!
    There’s a reason your article gets 87 comments by the time I read it, and Im glad to know there is another Sub30k Income Warrior manning the charge in the midwest – the goal is to educate, not de-motivate 🙂

  20. Alex Sanfilippo

    Thanks for this post. This is actually the first and only positive 30k investment post that I have seen! I’d love to read / hear more about how this has worked for you.

    Just two ‘off topic’ questions here…

    1. What is the 2% rule or 1% rule?
    2. ROI as mentioned above is the same thing as cap rate, right?

    Thanks again for this great post!
    Thanks, Alex

    • andrea wilson

      Hi Alex, I think positive experiences in the 30k range comes from area/location. I am in Cleveland OH market and we come across these deals all the time and lower. The rent usually goes for 950. Or so and they rent very well, single family houses and tenant pays all utilities.


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