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Updated almost 2 years ago, 03/31/2023
What price point should I look for?
Hello All,
I am highly motivated in becoming an investor, I've been educating myself with Brandon Turner's book on The Book Rental Property Investing, I could be jumping the gun without completing the book however, my question is, can I find properties in the price range of 100K to invest with a cash on cash return in a descent area with a good cash flow, my concern is the down payment I am not wanting to spend no more than 25-30K for a down payment. Is this possible or am I missing something.
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Find out how much you can borrow from the bank for a mortgage. It some areas it may be hard to find a good house for $100K. Don't just look at the return, but also the type of home. The cheapest house in town is likely to be in a not so good area and you will have problem tenants, higher turnover and higher costs.
I see you're in Houston. In Houston proper, it is possible to find something sub $100k, but as Theresa stated, it will probably be a low-quality rental
Quote from @Theresa Harris:
Find out how much you can borrow from the bank for a mortgage. It some areas it may be hard to find a good house for $100K. Don't just look at the return, but also the type of home. The cheapest house in town is likely to be in a not so good area and you will have problem tenants, higher turnover and higher costs.
Quote from @Murray Reginald:
Quote from @Theresa Harris:
Find out how much you can borrow from the bank for a mortgage. It some areas it may be hard to find a good house for $100K. Don't just look at the return, but also the type of home. The cheapest house in town is likely to be in a not so good area and you will have problem tenants, higher turnover and higher costs.
Quote from @Jevon Shaw:
I see you're in Houston. In Houston proper, it is possible to find something sub $100k, but as Theresa stated, it will probably be a low-quality rental
#4 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#4 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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There are markets where this is possible, more than likely lower class neighborhoods equating to high headache. Look at the date that book was written.
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Great that you are ready to take action! If you're looking for regular financing, I recommend getting prequalified to know how much you can qualify for. This will give you a good idea of what price range you should be looking in for homes. Additionally, in some areas, it can be difficult to find a good quality house in the $100K range, especially in a good area. Just recently, one of my clients was looking to acquire a house that was listed on the MLS for $65K, and less than 12 hours later, there were 13 offers on the table. The property eventually sold for $110K in less than 24 hours. This just goes to show that there can be fierce competition for properties in the $100K range that is located in decent areas within the Houston market.
I recommend working with a knowledgeable and experienced Investor-Friendly agent who can help you navigate the market and find a property that meets your needs and budget. They can also help you understand the different financing options available to you.
Best of luck in your home search!
Quote from @Murray Reginald:
Quote from @Jevon Shaw:
I see you're in Houston. In Houston proper, it is possible to find something sub $100k, but as Theresa stated, it will probably be a low-quality rental
DFW is a good market. However, like many others, it is not easy to cashflow right now. You definitely cannot get much for <$100k up here.
Hey! -100K is going to be hard, however rents are increasing significantly! Have you talked with your lender to see what your options are as far as down payment? Ask your lender about DSCR loan for rental property and then call me and we can see whats out there and makes sense for you.
@Murray Reginald
I would suggest getting in connection with myself or people who understand the numbers. Real estate is about numbers and relationships. There are markets in the 100k range that cashflow well. Consider the market the neighborhood where the subject property is located etc. I own in AL and MI both cashflow well and in the price point you mentioned. Need more info reach out!
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Quote from @Murray Reginald:
Hello All,
I am highly motivated in becoming an investor, I've been educating myself with Brandon Turner's book on The Book Rental Property Investing, I could be jumping the gun without completing the book however, my question is, can I find properties in the price range of 100K to invest with a cash on cash return in a descent area with a good cash flow, my concern is the down payment I am not wanting to spend no more than 25-30K for a down payment. Is this possible or am I missing something.
Welcome to BP.
Read more than just Brandon's book. Go to Meet ups and REIA's in your area. Listen to podcasts and the list goes on and on. The idea is immerse yourself in all that's out there so you can put your team together when you're ready.
I'd try to use conventional financing as much as possible right away. Get pre qualified with a lender that is referred to you from one of the investors at the meet up or REIA. They'll introduce you to a Realtor that works with investors. Let them know what your parameters are and see what they can do for you.
@Murray Reginald welcome! Why not look into a house hack? 3-5% down
@Murray Reginald live in 1 unit and rent out the others.
Quote from @Murray Reginald:
Hello All,
I am highly motivated in becoming an investor, I've been educating myself with Brandon Turner's book on The Book Rental Property Investing, I could be jumping the gun without completing the book however, my question is, can I find properties in the price range of 100K to invest with a cash on cash return in a descent area with a good cash flow, my concern is the down payment I am not wanting to spend no more than 25-30K for a down payment. Is this possible or am I missing something.
I'd look at what price point in Houston you can find C-B class rentals and if it's worth it for you. My guess is you'll have to go to a different market.
Quote from @Murray Reginald:
Hello All,
I am highly motivated in becoming an investor, I've been educating myself with Brandon Turner's book on The Book Rental Property Investing, I could be jumping the gun without completing the book however, my question is, can I find properties in the price range of 100K to invest with a cash on cash return in a descent area with a good cash flow, my concern is the down payment I am not wanting to spend no more than 25-30K for a down payment. Is this possible or am I missing something.
There are a lot of strategies, if down payment is a worry then you may want to consider a house hack. Find a 2-4 unit with just 3% down your money can go along way. Live in one unit rent out the others, and after a year if you hate it, then just move out, if you don't mind it then go buy another and keep repeating the process.
Go to your local REIA. Partner with the local wholesalers. Find a seller-financed home. These take nothing or very little out of pocket, BUT it takes time, effort, and relationships to get into the deal flow. Best of luck!!
@Murray Reginald- thanks - assuming you use all 30K as a down payment and you use conventional financing for a 1 unit purchase - your purchase price will be 200K
Hey Murray! I agree with alot of what the other posts have said. First you need to see what you could qualify for and what your monthly payment would be and then see how much you could rent that house out for. Keep in mind the cheaper the house, the more likely you will need to spend money on repairs and fixing it up. I am a licensed loan officer in TX. Feel free to let me know if you have any questions!
I'd suggest, like others, that you find a good wholesaler and consider finding properties that you can do seller financing. Both will have great deals for you that may be within your price range. I have a great recommendation for a wholesaler if you're interested. I also know of a really wonderful and reliable private lender that I can recommend wholeheartedly. We've done a deal with them before and we were able to only put down 10%. We did have to show 6 months in reserves, so please keep that in mind when running your numbers. I will be more than happy to share all my contacts if you're interested. Just let me know!