Author Topic: ....buying properties under $100k? Really?  (Read 5017 times)

Handlebar Harry

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....buying properties under $100k? Really?
« on: October 10, 2014, 08:54:13 AM »
The more I comb over these real estate and landlording threads, the more I see people actually finding super cheap real estate that they convert into rentals. I know it's not easy to spot these properties and takes a ton of homework, but can anyone lend some advice as to where you start? I do a lot of looking on Zillow and Realtor.com, but up here in the Northeast many doesn't scream "opportunity".

Would you say that most of the opportunities are brought to you by a well connected realtor or do you have a preferred research method online? Any help would be great! Sorry if this is covered in another thread...

pminkler

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Re: ....buying properties under $100k? Really?
« Reply #1 on: October 10, 2014, 09:01:12 AM »
Maybe it's just the location that's the difference?  I bought a duplex in a Buffalo suburb for $98k that has served me pretty well.  It was built in 1917, so it's definitely old and could use a helping hand with a few things.

The only reason that it rents is because all of the surrounding houses are just as old, and it's becoming more and more popular to bring back to life the old features of it...instead of making it more modern.  Natural materials abound.

As for how to find them?  I think the problem you're running into is just location.  If I went to Southern CA, I would never be able to find a comparable house.  In Buffalo, you can't help but find a property <$100k.  If you spend $120k+, you're a baller.  $200k+ is basically a mansion.

arebelspy

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Re: ....buying properties under $100k? Really?
« Reply #2 on: October 10, 2014, 09:36:28 AM »
All real estate is local.

Every market is different.

You can't compare Toledo, OH to Santa Fe, NM to Santa Clara, CA.

First you need to decide what market is right for you, and why.  Then see what's available in that market.
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johnhenry

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Re: ....buying properties under $100k? Really?
« Reply #3 on: October 10, 2014, 09:57:08 AM »
The more I comb over these real estate and landlording threads, the more I see people actually finding super cheap real estate that they convert into rentals. I know it's not easy to spot these properties and takes a ton of homework, but can anyone lend some advice as to where you start? I do a lot of looking on Zillow and Realtor.com, but up here in the Northeast many doesn't scream "opportunity".

Would you say that most of the opportunities are brought to you by a well connected realtor or do you have a preferred research method online? Any help would be great! Sorry if this is covered in another thread...

Come to the midwest, Harry, come to the midwest :)  I grew up on farm outside of a town of 250.  I live in a small midwest city of about 30,000.  In my hometown you can buy places for $30K that rent for $400/mo.  In my city(don't laugh at me Bostonians) you can buy places for $40K that rent for $650/mo.  They aren't on every corner, but deals like that can be found in little cities and towns throughout the midwest.  You don't need any special connections.  A combination of MLS listings for home prices and craigslist for rent rates will get you started.  You'll want to follow up by finding out what taxes and insurance are like.

Some folks out here in the flyover states are just as baffled by what Bostonians pay for houses/rent as some Bostonians are by how little it takes it takes to buy/rent a place out here.


Hannah

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Re: ....buying properties under $100k? Really?
« Reply #4 on: October 10, 2014, 10:12:58 AM »
I am pretty new to residential real estate. (I grew up in a commercial real estate family, and invested in that at a young age, but just bought a first residental rental property). I am not saying that this is the way to do it, but this is my step by step.

The way we started was by studying rental rates in certain areas of Raleigh where we live. We were shocked to learn how little rental rates by neighborhood or by property type. (We did this by pounding pavement, calling companies, and looking at Postlets and Craiglist ads). This is definitely where I would start- after this I'm not sure if what we did was right or wrong.

Once we figured this out, we had our number that we would pay for an investment property. In our case, we wanted to earn 12% a year after taxes and insurance, and planned capital expenditure (we paid cash so no mortgage), so we set a cap at $70K for a property that would conservatively bring $950/month.

Then we started watching Zillow/Trulia/Realtor.com/Auction.com closely. We could have done a flip, but we are not ready for that, so we just wanted a cheap house with minimal fixes required and NO HOA. Over the course of 6 months, we visited about 15-16 properties in about 7 neighborhoods. 4 of the neighborhoods would have not attracted the best renters, and the houses that we were seeing in the other 3 were too dilapidated. Finally, we came across a property that has some cosmetic issues, but nothing structurally wrong. We offered a price that was slightly above what the recent foreclosures had been purchased at (according to zillow), but well below the list price. We thought we might be insultingly low, but from there we started negotiations and got the place for 65K with tenants that currently pay $925 per month (but rent hasn't been raised since 2012, and is below market in the area).

We chose to do this without a realtor because I have not had the best experience with realtors. We did have a real estate attorney lined up, but in our case the listing agent got a killer price on the attorney, and didn't try to slimeball us into paying him as a buyers agent so the entirety of our closing costs was $600.

Handlebar Harry

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Re: ....buying properties under $100k? Really?
« Reply #5 on: October 10, 2014, 11:49:14 AM »
@arebelspy - would you suggest looking for markets that provide this type of opportunity or look for higher priced opportunities within my local market?

Then we started watching Zillow/Trulia/Realtor.com/Auction.com closely. We could have done a flip, but we are not ready for that, so we just wanted a cheap house with minimal fixes required and NO HOA.

@hannah - thanks for your detailed process. It's nice to reconfirm my own process of locating opportunities. It just looks like my market is a little different when looking at prices.

Come to the midwest, Harry, come to the midwest :) 

@john - you've peaked my interest! I'm relatively new to real estate, but the more I'm on here, the more I realize that there are better opportunities outside of my area. It's a little unsettling, but I may start educating myself about other markets.

@pminkler - how long have you been in real estate? I have family in Buffalo and never considered investing there... maybe it's worth a look?

Forcus

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Re: ....buying properties under $100k? Really?
« Reply #6 on: October 10, 2014, 11:50:16 AM »
I live near Peoria, IL. There are (1) many homes for sale under $100k and (2) many folks who "prefer" to rent vs. buy.

I know for a fact that some of the homes owned by the city have been sold (by sealed bid) for well under $10k, some under $1k. Not saying you get much, or that you won't be shot mowing the lawn, but it's cheap real estate.

Further north, I am trying to sell my first home in a rural town (but still a good location... 45 mins N of Peoria, only 1.5 hours from Chicago). In any other town it would list for north of $150k. I am getting no interest at just below $100k. 2.0 acres, a 25x35 shop, 2.5 car garage, concrete driveway, great views, etc. There is a house down the street that isn't terrible for $30k. I'd rent it out but I'm an hour away from it now and I don't want the hassle.

There are folks here who are building their own small developments with neat, clean little duplexes that cost around $130k for the land and two units that could rent for ~$1500/mo. You can do that math on that one.

Additionally, I know a few people who rent mobile homes and make a killing. I know a guy who rents 30 of them for around $600/mo and used mobile homes cost very little to buy. I think he pays a handyman to attend to complaints but otherwise it's low maintenance.

So it's out there... I just think youa re in the wrong location.

arebelspy

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Re: ....buying properties under $100k? Really?
« Reply #7 on: October 10, 2014, 11:55:26 AM »
@arebelspy - would you suggest looking for markets that provide this type of opportunity or look for higher priced opportunities within my local market?

Good question.  It depends on your goals.

Here's the process I've posted elsewhere I think people looking for real estate should go through:
Quote
In order, here's the steps I think you should take:
1) Identify your goals.  Be specific.
2) Identify what real estate market you're interested in, and why, and how it can help you meet those goals.
3) Identify ideal property types within that market.
4) Drill down to the neighborhood level.
5) Find a property.

(Then you have all the steps after that - due diligence, financing, etc.)

Most people start with step 5, but by ignoring 1-4 they end up with something that doesn't get them to their goals as quickly/efficiently, or even is a hindrance, or they end up with a subpar property market/location.  Start with steps 1-4, not step 5.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Handlebar Harry

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Re: ....buying properties under $100k? Really?
« Reply #8 on: October 10, 2014, 12:39:43 PM »
@arebelspy - thank you for that guideline. As mentioned above, I'm relatively new to real estate, but this helps reconfirm the proven process to success. I've noticed in other threads that you have properties outside your local area. Would you endorse this to someone who's thorough in their real estate selection (my Excel spreadsheets get a little intense as I am an analyst for my 9-5... :)), but rather infant in the process?

arebelspy

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Re: ....buying properties under $100k? Really?
« Reply #9 on: October 10, 2014, 01:00:42 PM »
@arebelspy - thank you for that guideline. As mentioned above, I'm relatively new to real estate, but this helps reconfirm the proven process to success. I've noticed in other threads that you have properties outside your local area. Would you endorse this to someone who's thorough in their real estate selection (my Excel spreadsheets get a little intense as I am an analyst for my 9-5... :)), but rather infant in the process?

Yes, but in that case you can't underestimate the people part of real estate.  Your team (Realtor, inspector, contractors, property manager, etc. etc.) will be vital to your success, so you will need/want to be able to handle networking and interacting with them in order to be successful.

It's true locally too, but even more so as you can't just DIY stuff.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

clarkfan1979

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Re: ....buying properties under $100k? Really?
« Reply #10 on: October 17, 2014, 03:32:27 PM »
I have lived in college towns for the majority of my adult life. As a result, I like to buy college rentals. I am applying knowledge that I acquired over the years. Do you have any knowledge that you can apply?

escolegrove

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Re: ....buying properties under $100k? Really?
« Reply #11 on: October 18, 2014, 01:43:48 AM »
I am also a financial analyst by trade. The key is to figure out what is important and to let your business model grow. We have a "very" specific business model that grew out of life constraints (husband active duty navy). We have been pretty successful in the areas that the Navy has assigned us. While some have been easier to find than other. I can say that except for our first 2 rentals all over our houses have been significantly over $100k. I also make sure to look at the taxes and insurances as those can be little goblins.