That may seem like a stupid question; after all, the definition of cheap house is one that costs less than what itâ€™s worth, right? Yes, but thatâ€™s not the whole picture. The cost of a house depends on more than just its selling price.
To illustrate the point, consider a house thatâ€™s for sale for $40,000, but has a market value of $100,000. That sounds like a great deal, doesnâ€™t it? So an investor buys the houseâ€¦then they find out that the house needs work thatâ€™s going to cost $40,000, no one wants to rent the house because thereâ€™s a junkyard in the backyard, and that same junkyard is bringing down the property values of all the houses in the neighborhood.
This is whyÂ evaluating an investment before purchasing is so important.
The other factor that should be considered is your personal goals. What seems like a great deal to one investor may not be for another, because it gets them one step closer to their goals. It helps to have aÂ business plan for property investment, because this helps outline your goals and how you plan to reach those goals.
If your goal is to generate a healthy residual monthly income as quickly as possible, then your idea of a cheap house would probably be one that you buy below market value, needs little to no repairs, and is in an attractive area with amenities nearby. Other investors may want to buy the house as cheaply as possible, do the repairs as cheaply as possible, then rent it out. Often this can be the cheapest route (moneywise) but a lot of investors donâ€™t want to wait for the repairs, or deal with the aggravations of getting the repairs done.
On the other hand, if youâ€™re looking for houses that will appreciate quickly, a cheap house will simply be one in a growing and/or improving neighborhood. Be sure to price all repairs prior to purchasing; even if the selling price is within a reasonable amount, the appreciation rate wonâ€™t matter if the costs of the necessary repairs are too high.
To determine exactly what type of cheap house will help you meet your needs,Â Contact us. One of our experienced brokers can show you our current selection ofÂ cheap houses for sale and help you determine which ones align with your goals.