The economy may be gathering steam, but real estate prices are still falling in many markets. In some rust belt cities, you can buy a house—a house!—for $5,000.
“It sounds like a screaming deal,” says Josh Dorkin, CEO of BiggerPockets.com, an online real estate investing forum. But is it?
Here are some things to keep in mind:
If you want a place to live...
Love the neighborhood. After all, you have to live there, and feel safe enough to sleep there at night.
Most of all, “you have to get an inspection,” Dorkin says. Repairs on a foreclosed-on property could cost more than the house.
If you want to rent it out...
Becoming a landlord can be a great way to make money ... if people want to rent. Research the neighborhood, because “it doesn’t matter if your house is great if every other house around it is terrible,” says Dorkin.
And don’t be so blinded by a bargain that you fail to ask if it’s really a deal. “Most people underestimate the expenses that come along with rental properties”—from fixing a tenant’s roof to finding tenants in the first place.
Out of the Box
Laura Vanderkam is the author of All the Money in the World.