Many investors are just looking to buy an investment property that is slightly below the average price of their area. This requires that you look elsewhere if the city you are residing in is not offering those prices. Investing somewhere else is not easy and it requires a lot of planning, management and work from you personally to make it successful.
The purpose of investing in low budget real estate properties is to give you that financial flexibility you need. But there are many things to consider before doing that. Do budget investments provide enough profit or do they provide lower than average priced investments? The answer is purely logical. If you were a renter in a medium-sized town, would you rather pay $2,000 for a property or pay $1,000 for a smaller property that will serve the exact same purpose? A lot of renters would go for the $1,000 price-tag because in the end, it is not long-term and it saves them money.
Compare it with another viewpoint, to buy an investment property in a big city for more money or buying a budget home in a small city. To buy a property in a big city there are expenses you must think about, like mortgages, higher property taxes and more expensive utilities. In a smaller city, property price, mortgage payments, taxes, and utilities are less it’s a less populated area. Cities where this is achievable are not limited or few, but we will be discussing the best in terms of profit to price ratio.
Best Cities to Buy an Investment Property on a Budget
- Considering its location and excellent weather, it is rather surprising knowing that Tampa offers lower than average prices for real estate properties. Tampa is one of the most in-demand cities to buy an investment property due to its vibrant and young working force.
Average Home Price: $140,000
Buffalo, New York
- A city with another young and active workforce, which shows the growing demand for rental properties there. To buy an investment property in Buffalo is becoming a favorable choice for investors due to its proximity to key cities in the area.
Average Home Price: $103,000
- Detroit is a city that offers possibly one of the lowest prices for purchasing property, considering its size and population. The city is fast growing because of its automotive industry and there are many shops, restaurants and businesses that are moving to that area. This all leads to more renting opportunities and possibly higher rental prices in the future.
Average Home Price: $40,000
These are some of the cities that can be used an example or reference if you decide to start your investment in a city which offers budget prices compared to others. But the concept of investing in budget homes is not about the location but it’s the price of investment and return on investment. It is important for you as an investor to check cities that are close to you. Identify the ones that attract more tourists if you are going down the path of Airbnb rentals or the one with least vacancy rates in terms of long-term rentals. To buy an investment property on a budget means that there is a possibility of making more profit than buying one in a big city because of the costs and expenses saved.
When buying cheaper properties you also have reduced the monetary amount of risk that you have invested. With the risk being lower, it gives you more time to correct your wrongs and to be able to sustain your property without being pressured into any rash decisions like selling prematurely.
It is important to understand that this type of investment is based solely on your ability to identify these locations that will offer you more income for a reduced investment fee. Many people who start investing in areas outside their comfort zone or in another state or city actually find hidden gems and are very successful. They purchase more and build a fortune from budget investments in different locations. You can be one of those, your investment property doesn’t have to be around the corner but it can be closer than you think. All you need to do is your due diligence to buy an investment property that meets your criteria.