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Updated about 5 years ago,
Getting started with Cheap properties in a bad market
I live in a unique area. It is very poor. Average rent is around $600 a month for a 3br home. With that being said it is not uncommon to find homes for under $40,000. Most of the time they have some minor cosmetic problems, and are a bit out dated. However with the clientele you would be renting to in this area, you wouldn't necessarily want a brand new updated home for a rental property. Property values in my city are not good. The average household income is around $30,000 a year. This brings me to my questions.
I am just getting started. I am in the process of saving up for my first investment property (prefer starting in rentals, but I'm open to anything really.) Should I focus on buying cheap homes in my city where I'm likely going to end up with tenants that wont take care of the home? Or should I try looking in a different city nearby where homes are more valuable and can attract better tenants? Or would buying and flipping be a viable option in this poor market? One bright side is labor is cheap. Hiring contractors in this city is much cheaper than most other cities. I just don't know if rehabbing homes would create equity in this market.