Short answer: slums or (tax liens or auctions for slum houses) These types of returns are certainly possible. I bought my share of $10k to $50k townhouses with

Short answer: slums or (tax liens or auctions for slum houses) These types of returns are certainly possible. I bought my share of $10k to $50k townhouses with $800 to $1500 / mo rent. With sub $100k houses, typically it will be difficult to get conventional financing, so most people buy these properties with cash or money from a HELOC or something along those lines. There is certainly money to be made when you are purchasing property for less than its construction costs. However, you have to ask yourself what the tenant profile is of someone who can not afford $5k to buy a house. The government program the commenter is referring to is usually called Section 8. People in financial straits can get on a waiting list to get accepted into the Section 8 program. Participants end up living in better neighborhoods than they could otherwise, and give landlords typically higher than market rate rents. The typical Section 8 profile is single mother with 2-3 kids and on welfare. Buying properties through tax lien certificates or auction has its own set of problems because you are buying 'as is'. Let's just say you need to do a bunch of research before you go into it, and mistakes can be costly. One of my friends found out he had a leaking underground oil tank in one of the properties, which costed $85k to clean up. Landlording is a very bimodal process. If you have very clean, responsible tenants, anyone can manage that property. The real issue is when you get one of these trouble tenants. One that knows all the ins and outs of the law and knows how to string out the eviction process (depending on your state laws) for years. You significantly increase your chance of encountering trouble tenants when your properties are in lower income, lower rental areas or dealing with tenants with government subsidized programs. The commenter linked to Tulsa, OK which has cheaper properties. This is great if you live close by, or have someone trusted to watch your properties. Property managers can be viable, but you really need to vet them throughly. I am currently out of the property game, but if I were to start over again, I would not touch slums. I'd buy in the cheapest neighborhood that I would feel safe living in. One with a lot of blue collar immigrants where there are signs of gentrification. Look for the type of cars, people caring about their landscaping and house, new construction, new retail / service stores opening. Buying in the right neighborhood drastically limits my exposure to trouble tenants, and buying in cheaper neighborhoods increases the upside opportunity. The reason you might want to value appreciation more than cashflow is because appreciation can be tax deferred. If I were to buy a property now, it would probably be a 4-plex, and renting or airbnb'ing the other spots. This optimizes for acceptable returns with low/no maintenance.