Buying a home for 40k or less where would you buy!!!??

[Rito Altamirano]

as title says!! If you were on the market to buy a home for 40k or less where would you buy and why!?

1. Where would you buy for buy and hold? 

2.where would you buy for rehab and flip. 

Reason i ask is i just watched a episode of the podcast videos and a guy i believe in wisconsin is purchasing 25k 30k 40k on multi family some with long term tenants in place etc. 

I have a couple thousand now but hopefully within the next 6 months ill be at my goal of 30k im looking to either buy a nice multifamily rental or cheap single home flip but not here in las vegas multi is around 100k duplex up to 350k for fourplex , i would love to partner those funds into a flip as well! 

So anyways if you were to try to fund a purchase for rental or flip with 30 to 40k where would you do it???

[Marcus Auerbach]

Anywhere as long as you like the neighborhood @Rito Altamirano

One way to look at an invenstment property is the replacement value: how much would it cost to rebuild it, if it would burn to the ground. If homes in a particular neighborhood are selling substancially below replacement value, you have to ask why is this happening? Why is someone selling his home for less than it would cost to build it and even include the lot for that price? It's a strong indicator of a fundamental economic problem: home values are so low - based on the neighborhood and NOT on the structure built on the land - that people are not willing to pay for the structure based on where it is. Essentially the seller is saying: my street is so bad, I will sell you the house for a fraction of the cost it would take to build it, maybe for less than the lumber, shingles and windows would cost. Essentially they are saying I am willing to pay you to take the property from me, because I just don't want to live here anymore. It's so bad. Who would seriousley consider this a good investment?

The second issue is renovation cost (capex). The test is: would the property value improve by at least the cost of a full top to bottom rehab when it becomes necessary. In other words, would it be worth to fix it or do you just rent it until it's done and then burn it? This ties back to the replacement value - if the market does not pay replacement value plus land value for a home then most likly you cannot afford to put a new roof, windows, kitchen and bathroom in the property without loosing money.

The question is not how much do you spend on a home. Because hopefully you can buy it below fair market value. The question is would the location of the home support the cost of the sticks and stones it is made from. If it does and you pay 40k for it you have found a really good deal and sometimes you get one of these.