I’ve had a lot of people ask how I buy most of my properties with cash, but not my own cash.First, I want to start with a typical lender parable.A guy walks into a Porsche Dealership and finds the car of his dreams, it will cost around $80K and since the Porsche guys don’t negotiate on price, he pays $80K.He calls his bank, and within 30 mins is zipping around his community in his new car.Never mind, it will never be worth what he paid for it, and the bank gave his a 2.5% rate for 7 yrs…I kid you not.Same guy finds a nice 3/2 home with hardwood floors in a “middle to working class neighborhood”.The home needs work, the AC is shot, needs paint and general updating.ARV is somewhere north of $65K, and HUD is offering it at $41K.He calls the bank, and the same guy that gave him 2.5% for 7 yrs on his car, laughs.Citing numerous laws and bank SOPs, he finds out that essentially this home, because of its price point (below $50K) is “unlendable”.Now the “how to”-The fact that you generally can’t get a loan for homes under $50K is a good thing for investors.Here’s why.These homes generally require much less than $10K in rehab.However, once the asking price goes below that magic number of $50K, it really means it can only be bought with cash, and that it will probably be bought for $25-35K.Yeah, that’s right.Why?

My wife does the screening and has told me about applicants that are co-plaintiffs on lead paint landlord/tenant suits and another case where  an applicant had an eviction case pending."

With a better paint job you could make it your own in-house TARDIS ...

Of course, it depends on the quality of paint and carpet, too.  

@Crystal Chang  wounded  :)  all of Ohio is not crappy.. there may be crappy homes in some areas but you cannot paint a broad brush.. but being a bay area guy born and raised..

a day maybe to sweep the floor +/- paint...

The project was mostly paint and carpet.I'm not sure I'd buy a HUD home again.

I was proud to have a group of 10 local investors I know join early last Saturday morning to paint over graffiti in the East Lake neighborhood (all BP members too!).

Often just paint, carpet, hvac, some times a roof.  

If they keep monthly dues arbitrarily low and not building reserves it usually signals that the HOA is going to special assess every needed repair to common area i.e. siding, roofs, paint etc.Also determine whether they pay water as that can get extremely expensive if hot water is included as many HOA's in large buildings.