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I want to buy a 35k-60k home and rehab and rent? Is this a good strategy?

FAQ

It looks good on paper those numbers, but after working with hundreds of investors, we have found that what looks good on paper doesn't put that $$$ in your pocket.  Let me explain.

With the lower priced homes, on paper it shows 15% cap rates.  BUT, the tenants that look to rent these properties have a harder time paying, and literally take 2x as much of your time and effort because of constant asking for rent payments, evictions, etc.  And on move-out, the repairs needed each time is much greater then someone that is renting a home that is worth 100k-150k that is paying $1,000-$1,500/month.

After you factor in eviction filings, additional work needed to keep tenants paying, vacancies(much harder to rent these to good quality tenants then someone looking to rent a home for $1,500/month), work needed on evictions(which you will have much greater percentage then larger homes), your 15% cap rate suddenly becomes a 5-6% cap rate at best.

Another factor to keep in mind is the properties in these areas do not increase in value.  I would rather own a 125k property that is increasing in value 3-5% per year, then have 2 or 3 50k properties that actually lose value or stay stagnant.  I know people that purchased in these type of areas(35-50k home prices) 10 years ago that have homes worth the same or less then 10 years ago, plus they get all the headaches of these homes as I described above.
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