Very low priced rentals available, would you consider it?

[Johnny Lau]

There are 3/1 houses in Alabama that go for 25-35,000 and rent for 550.00 with established renters already in place. So the house is already performing. The numbers are very good considering the price. This is about double the 1% rule. I may buy one just to see how it turns out, after all due diligence of course. Does anyone out there have experience with super low priced SFR?

[Jason Cory]

I deal with these exclusively in Birmingham. It's the only way to have performing rentals. It's low price,i.e., no possibility of depreciation. It can't go any lower. It can only go up. 

You should only buy if it's a Section 8 tenant & a 3 bedroom at this price point anywhere in Birmingham should rent for $750 minimum. Anything less is a red flag from the tenant, landlord potentially a slumlord, etc. 

I haven't rented a 3 bedroom house for less than $750 since 2010. These pay for themselves in less than 5 years at this price point. If you actually make repairs & treat the tenant like actual human being they always stay long term. I've had a 20 year tenant with a property I purchased & resold later. 

If my hunch is right this property is in the West End area, 35211, & has been on Zillow recently. If it's this house all local investors have already passed on it. 

Do not count on the tenant keeping jobs in this price point to pay the rent. Always rent to Section 8 tenants in this price point. That's your guarantee for rent & recourse in the event you need it. Problem tenants risk getting kicked off the program & in turn lose their assistance. That's your leverage. Use it wisely. 

Higher returns with less invested. That's investing. 

$750 or more with Section 8 is the only way you pull the trigger. 100% cash on cash in 5 years. No reason whatsoever to spend $100,000 to get $1,000 rent. You might as well buy a CD or annuity for that return. It's the same return as the cash flow without market fluctuations or expenses. 

Birmingham has 24 opportunity zones. You'll never pay capital gains investing in an opportunity zone. Google them. You'll keep more money today & in the future.