Cheap vs Moderate Priced SFH Buy and Hold Question

[Derek Merdzik]

Hey everyone, I am looking to get into SFH/Duplex rentals in the US, I have experience in Canada. I have am trying to fully understand the aspects and trade-offs of low value property buying and renting vs a higher value house that you can get a mortgage for.

For example a $20k house in Cleveland, OH that cash flows strongly, but will not appreciate in value and will likely depreciate.  Versus a $100k house in Columbus, OH that has weaker cash flow, but might appreciate or at least keep it's value and I can get a mortgage for. 

At these prices, the out of pocket cash is close to the same, so it's a cash flow vs capital appreciation question.  However once a Cleveland property gets a bit more expensive, say $35k with justifiably stronger cash flow, more cash is tied up.

I have two questions:

1. Are there ways to free up any portion of that cash tied up in a cheaper property for reuse?
2. What are your thoughts on cash flow vs capital appreciation, how do you factor each in?

[Dennis M.]

You can make money on 20k houses but you have to be a different kind of investor and I’d doubt you’d do well if your paying a property manager and contractors . Yes it likely won’t appreciate ( atleast not well) and yes your tenant base isn’t going to be like a b or A tenant . But there’s money to made for the hands on guy especially if your willing/ able to do your own work/ swing a hammer . Rest assured people have made millions running cheap house rentals you need to ask yourself “ is it feasible for ME to do it “ . “ does this fit into my strategy long term”