Thoughts on how I should proceed please

[Joe C.]

Hello to everyone and thanks for all the knowledge I've gotten over the pasts months reading others posts on BP, this is a great place to learn. Well I've just about got my ducks in a row and just looking for some thoughts on how to proceed. I'm looking to buy and hold/rent. I've got about $20k and the properties I'd be comfortable getting are in the 25k-50k range with rents at 750/m. The houses that are around 25k would need 12k-17k in renovations to be rentable. Where I'm questioning myself is wondering whether I should buy the low end home with cash and then get a loan to fix it up. Or should I just get the high end home and get conventional lending and rent immediately? Any comments greatly appreciated. -Joe-

[Mitch Kronowit]

We're looking for another rental as well and given everything else equal, I would buy the fixer upper. In general, you'll get a better deal since the turnkey homes sell at a premium, i.e., you're paying for the work and time somebody else already put into the property. Plus I am comfortable with renovation and can do most of the work myself, saving big $$$. But if you're not, plan on writing a lot of checks made out to contractors. Not a big deal if you budgeted for it, but remember, you're making them money instead of yourself.

Also, consider the neighborhood. I would rather buy the ugliest house on the nicest street than a swan in a dump. If you fix up a neglected house in a good neighborhood, you'll make money. If you pay top dollar for the best looking house in a run down neighborhood, it may cost you more in the long run.

Good luck, let us know what you decide to do.