Passive Real Estate Investing TBT: Ask Marco - Should I Invest in a Cheap Property?
Aug 7, 2025
A listener seeks advice on investing in cheap properties, prompting a discussion about the true meaning of 'cheap' in real estate. The focus shifts to the importance of location and tenant demand over merely seeking lower prices. Marco highlights strategic investing in strong markets to secure steady returns. He also addresses evolving rent-to-value ratios, urging investors to adapt their criteria in today's market. Valuable insights emphasize the need for thoughtful choices in property investments for long-term success.
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Define Cheap Relatively
- Don't define "cheap" properties by absolute price alone.
- Consider the local market context and neighborhood quality instead.
Choose Strong Neighborhoods
- Invest in B+ or A- graded neighborhoods with a mix of white and blue collar tenants.
- These neighborhoods have steady tenant demand, strong comparables, and good resale potential.
Prioritize Cash Flow
- Ensure the property generates positive cash flow to cover expenses and mortgage.
- Use spare cash flow wisely by saving and reinvesting, keeping reserves for maintenance.