Do the research, then stick with what the numbers tell you
Key Takeaways
- Ignore what your eyes tell you about property’s appearance: study the numbers, cost of repairs and the area.
- Pay 20 percent to 30 percent under market value or move on to another deal.
- Buying in poorer areas means less competition for the deal, and it could make you 12 percent ROI or better.
Invest in distressed, under-market-value properties for true cash flow, but be certain to:
- Carefully study the market to learn which area is near a hot area and will likely go up in value in the next year.
- Get the property for at least 20 percent under market value to leave room for a profit of at least 25 percent on a flip and 10 percent ROI on a buy-and-hold.
- Owner finance the property to a qualified buyer — save yourself thousands in rehab costs. Do enough to sell the house and leave the rest to the new owner.
If you invest carefully in properties in poor or bad areas, you will end up with cash flow that all the poser investors simply dream of.
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