This video, we're going to answer the question of "Should you Buy Cheap Rental Properties?"
You might be looking at cheap properties that are being sold for $20,000 to $50,000. Or even low as $10,000! But the rents are relatively high in comparison to the purchase price. The cashflow might look great on paper but there are some key things to have in mind before buying these types of cheaper properties.
First, let's talk about the different classifications of real estate:
Class A - High Quality (Often Luxury) type of properties. Prime location with a higher quality tenant. Often times, you're going to pay a high price for Class A properties but you're going to run into fewer maintenance issues.
Class B - Mid-High Quality type of properties. Favorable location with a decent quality of housing. You still have access to a decent pool of tenants to select from. The downside is that the property may not be near a prime location.
Class C - Medium Quality Type of Property. You'll have more of tenants with blue collar jobs. You may also have a higher need for on-going maintenance.
Class D - "The Cheap Properties" Low-Quality Properties often in challenged areas. Higher rent in comparison to the purchase price. Higher capitalization rate. May come with a higher rate of crime in the vicinity. The big issue is going to be the headache from tenants, maintenance, and the chance of not collecting rent. Though your cash flow is going to be higher, you're going to be facing with a fairly large influx of tenant challenges.
So should you buy cheap properties? The right question to ask is, "Are cheap properties and its management needs part of your long term financial goal?" If buying cheap properties fit inside your goal, then you should! But be prepared to handle the various challenges that may come with buying cheap properties.
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The Kwak Brothers are millennial real estate investors who have acquired over 76 Units of Rental Units and have raised over $20,000,000 in the capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping ordinary people become real estate investing champions and rockstars! They specialize in owner financing negotiations and multi-family rentals.
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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.
