One thing that most real estate investors agonize about is the price range of the properties you target. The general school of thought is that the more expensive the properties you invest in, the more money you make.

This article looks at both scenarios and how you can target the right properties for your business model.

First of all property prices depend on geographical region. For example houses are more expensive in California than say, Texas. So depending on your local market, you have to decide what is cheap and what is expensive.

A medium class 3 bedroom house would be considered a safe investment in the medium price range in most places.

So what determined which price range to invest in?

1)      Business model

When I wholesale my houses, I target properties that are less than $150,000 in Texas. These are the houses that most investors would comfortably fix up and rent out or re-sell. By most investors, I mean they are easier to sell because there are more potential buyers.

Medium income neighborhoods are more common in the markets I target and therefore seem to have more properties for my business model.

If you are buying properties subject to the existing mortgage such as lease to own, you may be able to target a higher price range for your real estate investing deals. In the same price range, wholesale business model may not work as well.

Similarly when you target luxury homes the price range of the houses you buy  goes up.

2)      Neighborhoods

Once you move to the lower end properties, chances are that you target lower end neighborhoods. These come with their own set of problems such as vandalism, defaulted rent payments, trashy tenants, etc. The list goes on and on.

Depending on your market, you are most likely to target neighborhoods that have the most properties for you.

3)      Target profit

There is a general conception that the higher the price range that you target, the more profit you make. This may be true. But it could also mean more capital investment such as advertising to target higher end buyers.

Repairs (even touch-ups) can cost a lot in luxury homes. This means that you  stand to lose more when you target higher end properties if the deals don’t work.

In general, you will handle less higher end properties but they will give you more profit per deal. You can do more lower end properties and probably make as much or more profits.

4)      Availability of buyers

The higher you go in your price range, the less people you get who can buy those properties. You have a lower pool of buyers for luxury homes. Likewise when you target the lowest end, you will get less buyers because most people tend to turn away from them.

So which is the best business model for real estate investing? It depends on your choice one you consider all these factors.

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Tags: real estate investing, real estate investing website, real estate investor, real estate investor website

This entry was posted on Sunday, March 6th, 2011 at 8:26 pm and is filed under House Flipping Website, real estate investing, Real Estate Investing web sites. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.