Low End Vs High End Rentals
Many investors try to decide if they should buy low end rentals or high end rentals and need to consider the ups and downs for each. Low end rentals have the advantage of being cheap and the ROI can be very high. This is great, but most of these properties won't resell for more than they are purchased for so the landlord needs to be ok with a property not having the potential of appreciation in the future. These are typically the C neighborhoods or warzones. Some of these properties are so cheap that the investor can have the entire amount returned within a 2 year period. The hard part with properties like this is that they tend to come with a lot of problems and rent is much much harder to collect than a high end property. On high end properties, they are normally purchased at a high price in A neighborhoods and therefor the monthly cash flow is much lower than on the lower end properties. The plus side to these is that many times the properties have the potential to appreciate. Rent is easier to collect than on a low end property but the lack of monthly cash flow or the financial bind that vacancy can cause will be significant. The key is for the investor to have a detailed goal and plan prior to buying either kind of property. The investor should also be very aware of their own appetite and how tough they really are. If they believe they can handle a warzone property but can't, they will find out very quickly.
Ian Walsh
215.839.3271
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