We get it – houses are expensive, now more than ever. It’s only natural that investors would turn to low-cost properties. On the surface, there’s clear appeal: less capital upfront for an income-generating rental property. Why wouldn’t you go with the cheapest houses you can find?

If you’re like many people, you like to browse real estate listings. Sometimes, you come across a property with a shockingly low price tag in a great part of town. You might think, “Wow! What a deal!” Then, you start looking at the pictures and realize that the whole thing has been stripped down to the studs, and it would take double the asking price or more to get it habitable. Oof. 

That opportunity might excite some more hands-on, flip-minded investors, but it’s not for us. At that point, it’s pretty evident that the property will cost you far more than the seemingly low asking price. But it’s not always so obvious. Some properties may not look the best – they’re serviceable – or be in the best neighborhood, but they’re affordable, so why not?

Well, we’re here to tell you. Here’s why investors shouldn’t target low-cost properties.

What a strange year it’s been for the real estate market! Nothing about the Spring buying season worked, interest rates put a damper on everything, and investors felt the market squeeze. Thankfully, the trends and data we’re seeing point to the beginning of the end of this real estate slump.

Although increasing mortgage interest rates have begun to cool the costs of the real estate market, buyers and homeowners are finding themselves going to extremes to keep costs in check.

As real estate investors, it’s important to know your market. For passive real estate investors, you may not be involved in the day-to-day operations of your real estate investments—you might not even be all that involved in acquiring your properties! As busy people, you don’t want to have to sweat the small stuff. What you do want to know is that your investments are in good hands.