I also think it is a myth that the average retail buyer can waltz out there and buy something 20% below market off the MLS with his Realtor. From what I see in the market, there are really only 2 sources of true under market deals: 1. Trustee sale auctions (all cash), 2. Major fixer disasters that mostly the flippers buy with hard money or cash.
Most retail MLS buyers getting mortgages to buy even if they spend a ton of time looking and make a lot of offers will likely pay 95% or more of market. A big mistake many make is buying a “fixer upper” that needs $30k in fix for only $30k less than the similar fixed up house, thinking they are getting a deal. Why not just buy the clean one and save yourself all the work! And finance the costs of fix up done by someone else at 4% for 30 years vs. paying it out of your pocket. Now if you get it $60k under market and it needs $20k fix, that is getting better.
Berishgirl, thanks for the info on your rental across the vacant lot. That is a good warning, you can’t be too careful with location. But I still do not see the logic and where the ROI is on a $265k 70 year old house that gets $1,600 in rent:) Break that out for me. Now a $100k house that gets $1,250 in rent, that is more like it.
