What are your Criteria?

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Unlike Mike and Open here, I haven't had to network yet. I watch HUD and the MLS very closely, waiting for the house to turn into the deal that I want. If I had instant access to funds every time I spotted some thing that I wanted most likely I would run out of MLS properties and have to start networking too.

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That is a great story Mike, congratulations on your successful buy. Just goes to show that getting the word out like you say helped bring a deal to you rather than you looking for the deal.

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Nice story Mike.. how sweet are those deals?! lol.. I recently got a guy to sell me his house worth $60k house for $20 because his wife died and he wanted to move back to Oklahoma. The reason he gave it to me rather than someone else.. because every other day when I go buy a loaf of bread or whatever at the store he works at, I smile and say hello to him, and have a brief conversation usually. He knew I was an REI, and I was the first person that came to his mind he said. This deal has really made me see how profitable networking can be....

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Mike, Hey was just wondering if you could elaborate buying property for less than 50% of market value...? I'm a new investor and was wondering if this is a property that needs to be refurbished to get back up to market value? Isn't market value the amount someone would be willing to buy and another would be willing to sell a property at? Thanks!

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Tbd, The market value of a property is the price it would bring on the open market - in other words, the retail price. Properties can be bought at lower than the market price when the seller is DESPERATE to sell. For example, the last house I bought was a 2 bedroom house with a 2 car garage. A nearly identical house literally across the street sold recently for $52,000. I bought the house for $20,000. The seller was an older woman whose father had owned the property until his death. The woman held the property for a full 2 years, paying insurance, utilities (including heat), taxes all the while. She finally got to the point where the house was a huge psychological problem for her. Why didn't she list it with a realtor two years earlier? Why didn't she put a FSBO sign out? If she wanted to sell it quickly, why didn't she put an ad in the paper and get $35K or $40K for it? I don't know. Instead of doing those things, because she was sentimentally attached to the house, she kept the house until she became DESPERATE to sell it. She knew someone who knows that I buy houses and can actually close. She called me and I asked how much she wanted for the house. With a two minute phone call, I determined that she would sell the house for $20K, which I KNEW was less than half the market value. I met with her a half hour later at the house. It needed virtually nothing to be rentable. After looking at the house for 10 minutes, I said "I'll take it". No bargaining, game playing, or other nonsense, just "I'll take it". She asked if that was all there was to it? "Yes, that's it", was my reply. We signed a contract right there on the spot and closed a few days later at my attorney's office. That's how you buy a property at less than half the market value. Good Luck, Mike

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Tom, As I stated, I was in no way knocking your strategy and I understand perfectly how the game is played. You did not specify in your post what part of OH you invest in. OH is a big state with many cities. I also did not say that you would lose equity in which you started with. I simply implied that the lower income areas do not appreciate like the better neighborhoods do. I am glad to hear that you stay clear of the crack dealer neighborhoods. That is a positive for you and your investments.

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The city that I invest in is depressed and has been since we lost the steel mills. We range around 5 shootings per year, which is low. The homes that I purchase are HUD's and REO's that have been on the market for more then 6 months. Many have been vacant for 2 years or more. I only buy in the middle class (for my community) area's of the city. No war zones. Most of the neighbors are either low to mid income people. Keep in mind if you make 30 to 40K a year in NE Ohio you are doing better then many folks. I do not have a high turn over in tenants. They are needy and do require attention. I am banking on the fact that the city has been depressed for so long, that sooner or later it will come back and the area's that I buy in will be some of the most desireable area's to live in. Will, I cannot say it any clearer, you are wrong and frankly have no idea what you are talking about when it comes to investing NE Ohio. At the price I am getting these homes at, they will not depreciate below my investment and have shown to come in exactly where I estimated they would after rehab. Matt You do not see crack dealers and hoe's standing on my streets. I would never be able to get rents between $550 and $600 a month in that situtation. Those area's of the city will only bring in the upper $300 range and you can pick up properties ready to rent for 10 to 15K that require no rehab if you want to be a slum lord.

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Mathew, you would be correct that these are not the nicest of neighborhoods. Not to "knock" Tom's business, but bying in the lower end areas will produce low future appreciation. These units are for cash flow only, and the management, tenant turnover and upkeep are high maintenance and require hands on. Very difficult to do from out of state in my opinion.

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Tom, that's pretty impressive! What's the market like out there where you can buy SFR for $20K? I think I'd have to go into the economically depressed urban areas around here to find properties like that... which would violate the safe for wife and daughter rule.

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Under 20K for a SFR Maximum rehab 5K Maximum rehab time 2 months (Part-Time) Must have 25 to 30K in equity ARV Must obtain $550 + in rents. Any close to total investment at or above 25K must produce rents at $600 or above. Area must be safe for wife and daughter to work. You can apply the same to multifamily per unit as well.