By Fred Matera, CIO, Redwood Trust A lack of affordability will lead to near-term weakness,…
Grow Your Rental Portfolio with Cash Flow Properties Under $100k
By Michelle Suiter, Relationship Manager
Cash flow versus appreciation: which one is right for you and your real estate investment goals? This is a question that many real estate investors ask when determining how and where to grow their rental investment portfolio. The answer to this common housing investment quandary could mean the difference between immediate cash flow and/or playing the long game – as in long-term wealth building.
If cash flow is your preference, the barriers to growing your rental investment portfolio could be reduced by considering entry into cash-flowing markets that offer investment properties under $100,000.
Where to Find Cash Flow Properties for $100,000 or Less
Housing market experts, such as John Burns Real Estate Consulting, projects growth in Single Family Rental forecasts ranging from 3% to 5% across the majority of top markets. So, where are some of the best real estate markets to purchase C class properties that can deliver the potential promise of cash flow profits?
Many cities are experiencing revitalization and growth, providing investors with opportunities to fulfill the growing demand for rental properties. For investors that take advantage of these opportunities, rents can exceed the monthly mortgage and expenses. This leaves you, the smart investor, with recurring “mailbox cash” (or “Venmo Cash” for the tech savvy investors collecting rent in today’s world).
Even during this time of economic uncertainty, there are a plethora of opportunities for real estate investors to provide rental housing. Keep in mind, market listings are just the beginning of the inventory selection. There are many investment opportunities via auctions, REOs and other off market offerings.
Below is a list of markets that offer housing inventory for $100,000 or less and display sought-after attributes most tenants seek when deciding where to live (jobs, economy, growth, etc.), as well as landlord-friendly laws for the investor.
- Active listings under $100,000: 262
- Percentage of listings under $100,000: 6.17%
- Active listings under $100,000: 272
- Percentage of listings under $100,000: 25.33%
- Active listings under $100,000: 281
- Percentage of listings under $100,000: 14.73%
- Active listings under $100,000: 755
- Percentage of listings under $100,000: 50.30%
Fort Wayne, IN
- Active listings under $100,000: 322
- Percentage of listings under $100,000: 41.18%
- Active listings under $100,000: 920
- Percentage of listings under $100,000: 41.61%
- Active listings under $100,000: 547
- Percentage of listings under $100,000: 35.06%
- Active listings under $100,000: 1,484
- Percentage of listings under $100,000: 67.92%
Source: All data collected from Realtor.com and Gobankingrates.com as of August 2020.
See How It Gets Done – A Cash-Flowing Rental Portfolio Loan
This investor partnered with CoreVest to expand his rental portfolio by obtaining the funds to purchase investment properties in Michigan (pictured below). Utilizing our rental portfolio loan, the investor acquired 44 properties (63 units) with an average purchase price less than $100,000 per property. Kudos to the investor for finding these properties and using financing leverage to increase his purchasing potential. We work with investors like these each day, customizing our lending products and strategies to meet their investment needs and help them grow.
Finally, I would be remiss not to mention the risks associated with the current economic climate and the tragedies and struggles caused by COVID-19. This pandemic has impacted millions of people, including the housing market, tenants and landlords alike. While my crystal ball does not provide a glimpse of absolute certainty for the future, I do believe that this too shall pass. Our resilience will prevail, the economy will recover and there will be continued opportunities for growth.
Regardless of your investment strategy, CoreVest is here for you every step of the way. Allow us to become part of your team, as your preferred lending partner. For more information about how CoreVest can help you grow your rental business, please call Michelle Suiter at 949.541.8972 or email firstname.lastname@example.org.