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By: Simon Macharia

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Monday, 16-Jan-2012 19:26 Email | Share | | Bookmark
Low Income Single Family Houses – Hidden Profits

Lots of real estate investors start by buying single family houses. Whereas these can fall into any price range and a whole variety of neighborhoods, which type of houses are considered the best investments?

We explore why most people prefer single family houses.

Most new investors start by trying to identify the types of houses they will be buying, and the neighborhoods they will concentrate on. Most investors favor lower income single family houses.

My very first real estate deal was a wholesale deal in a low income neighborhood. I was able to flip it the same day and closed in about a week, netting about $12,000. Since then I have adopted most business models in all neighborhoods, and eventually I settled to lower income areas. I consistently get good deals from these neighborhoods.

Remember that neighborhoods are very important in real estate investing. You do not want to end up buying houses in a war zone. Avoid bad neighborhoods.

The most profitable deals you find will be in the middle income to lower income neighborhoods. Where I live, the price range is $80,000 to $150,000. Of course, this range will vary in different places. I rarely invest in cheaper, or more expensive properties. You can go to cheaper neighborhoods as long as they are good.

There are a variety of reasons why this is so

1) More properties
Most people live in the middle to lower income brackets and neighborhoods. This means there are more houses to choose from. Your marketing will be more successful if you target these neighborhoods.

In most markets, high end and low income houses are usually less.

Even in tough real estate markets, these neighborhoods will present more profitable deals.

2) More affordable
You want to invest in properties you can afford. These houses are cheaper, and you are likely to afford them more easily regardless of your business model.

Of course you must buy low and sell high.

It is also cheaper and easier to repair these houses. This means you can turn them around more cheaply and easily.

3) Easy to rent
There are more tenants in this price range if you rent out your houses. Most tenants prefer this price range.

This means lower vacancies in your properties.

4) Easier to flip
Most people buying houses are looking for the middle to lower income houses. If you wholesale houses, you are likely to find a buyer pretty fast in these neighborhoods.
I regularly find wholesale buyers for these types of properties within a day of putting it on the market.

If the price is right, selling properties in these neighborhoods should be easy.

This also applies if you fix and sell houses. There are more home buyers for these properties. This means you have a bigger pool of potential buyers and you are likely to sell them faster, meaning you will have less holding costs and make more money.

As a real estate investor buying and selling houses, you must work smart and close more deals spending less time, money and effort. This strategy for real estate investing that automates tasks and marketing helps you close more deals.


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