is "every house is a deal at a certain price" true?

[Joe Capobianco]

in the latest podcast I've listened too and webinar i watched i remember hearing the quote that "every house is a deal at a certain price" and i have a few questions about this quote.

i'm not sure if i am overthinking thinking this or simply not understanding what "every house is a deal at a certain price" means. i'm thinking they're saying if i can buy a home below market value, fix it up, cashflow with rents at market rental rates then its a good deal but what is stuck in my pessimistic mind is. "what if nobody wants to rent the home?" whether its because of location or local school systems? 

when i'm looking for potential buy and hold properties i'm looking at the surrounding homes that have recently sold, how close the house is to major highways or train stations, and local school systems. 

am i over analyzing or should i go for a house in a C neighborhood if i can buy and rent at market rates and still cashflow? 

i just question "if i have the rental, will the renters come?"

[Bill Gulley]

Seems Logan was more on point. :)

As to Joe's comment, guru folklore folks. No, dirt with some improvement on it isn't a "deal" at lower price or even if an owner paid you to take it (within reason, because no owner would really pay a huge premium to dump a place in reality, they just walk away).

I've turned down several free houses, even free isn't a bargain!

You buy distressed properties ate distressed prices, you don't ever buy below market value if that property and sale met the conditions necessary to arrive at a market value. 

Land is generally an asset, we talk about it as an asset, but land can be a liability. 

Go get that steal of a deal on that 65 year old shack that some poor slob might rent to stay dry. 

You can face some unique problems as a slumlord, when your property doesn't fall within the mean rental market or in some aspects higher.

Besides the crime and economic issues, you're more likely to have compliance problems, no city government likes a slum area, have you heard of eminent domain?

When you get chased out and decide to update or improve a non-owner occupied property you'll find the building regs folks standing there. Oh, bad roof with 4 layers, asbestos insulation, wiring, flooring, exposed lead, tile sewer lines cracked, you have a liability! It can cost you much more to remove toxic items and waste than the land would ever be worth! Does your city require a crack house clean up as a chemical waste site? 

Anyone recall the Toxic Waste responsibility laws that the banks went through in the 90's, like old gas tanks, oil tanks, chemical spill and disposable chemical areas?

Look up "Times Beach, Missouri" the whole town was closed, folks bought houses there and they all lost money. 

So, you figure the house can be rented for something, you buy it cheap and it has a payoff of 8 years to meet your break even. The neighborhood is going down hill, crime is up, those you do rent to have a hard time paying, the place gets more damage, vacancy goes up, you get citations from the city, 3 years later you can't rent the place. You're stuck with a liability and this happens all over the country.

Besides the drastic stuff that can happen, new investors need to understand the maturity cycle of neighborhoods, new-expanding, to stable, down to mature, to stagnant, to declining to distressed. 

In distressed areas, rents do not go up as fast as expenses, cash flow slows and expenses can increase. Stagnant areas can have the same issue, generally not as drastic or accelerated. Mature, stable areas are where you'll usually find the better deal but understand too that the clock is ticking on these areas so due diligence and an eye toward revitalization needs to checked out. 

There is an aspect of all residential and commercial appraisals, the appraiser notes the expected economic life of that property in its current use, this can be less than your mortgage term, if it is, you and your lender have a problem.

And, yet again, learn the basics of real estate, function, utility, highest and best use, why land is valuable or not. The basic economics of small real estate investing. Good luck :)