Recently, I was asked what kind of deals I was finding out there in the marketplace. I shared with a gentleman that I was picking up properties for less than $5000, putting some work into them and either keeping them as long term investments or selling them for $25,000 to $30,000. His ears perked up and immediately said it was not possible.
So I proceeded to show him all my inventory and soon he became a believer. A lot of people don’t realize there are STILL some great deals out there if you know where to look. There is also a lot of junk too so obviously you have to be careful. It’s taken several years to finally have the right team in place so it all runs smoothly.
All the houses I’m buying right now are mostly your C class houses. These are depressed markets that have been hit hard and generally the homes are a little older and almost always are in need of some repairs. But they make great rentals. Please will always need a place a live. So the key to all of this is location. I don’t care how cheap the house is, the focus is good neighborhoods. If you cherry pick and only buy houses in the best neighborhoods, you will always be able to find renters. Or if you need to sell quickly, usually you can sell the property fast.
Now some people/investors might tell you to stay away from properties like this. And I agree if you don’t know what you are doing. Just like the stock market, there is a lot of fraud and manipulation in the market and if you believe everything you hear, you’re taking a big risk. You have to learn to research it out on your own and find out for yourself rather than rely on someone else.
But, there is a ton of opportunities still out there and some Amazing deals. There are only a handful of areas like this. More than likely these are not located in your back yard. But don’t be scared to invest out of state. This is what property managers are for and if you can find the right ones, they will make life a lot easier.
The easiest way to find houses like this are at auctions. Each year, the county holds an auction to pay off some of the back taxes that are owed. I focus only on Deed auctions. A deed auction is where the highest bidder ends up with the deed to the property. There are other auctions where you just have a lien against it. Still a great option, but I would rather have the deed. Normally these auctions are only once a year. Depending on the inventory, they may hold several.
Detroit is a good example. are tens of thousands of properties that are abandoned because no on wants to pay the taxes on them. And because there are so many, they have a few auctions throughout the year.
And just like the stock market, you don’t take someone’s word for it, you physically go see what you are buying. Even on Google earth. You might see a great looking home that was there 2 months ago, but now all it is, is a vacant lot that is worth next to nothing. So you really do have to do your due-diligence before you ever pull the trigger and buy something.
You can get someone like an agent or rehab crew or even property managers to take a look and send you a video if you want. There are some real gems here. Just remember, the key is location and neighborhood.