How To Determine The Best Price Range For Real Estate Investing Properties

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Author: Simon Macharia

A lot of real estate investors are unsure what price range they should target. Higher profits are generally associated with more expensive profits.

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

The geographical region determines the price of properties. 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. In most places, a medium class 3 bedroom house, would be a safe medium range investment.

So what determines which price range to invest in?

1) Business model I target houses under $150,000 in Texas. Most investors are looking for these types of houses. 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 your business model is lease to own, you may be able to target a higher price range. You might be unable to do wholesale deals in the same price range.

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.

The best properties to target are the most common ones in your market.

3) Target profit There is a general conception that the higher the price range that you target, the more profit you make. Maybe this is true. But you probably need to spend more capital to invest in these properties.

It is expensive to repair luxury homes, even touch-ups. 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 handle more lower end properties and probably make more money.

4) Availability of buyers The higher you go in your price range, the less people you get who can buy those properties. 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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