House purchasing economies of scale

This one is a quick reminder for those attracted to investment properties. The right home to have for the purpose of renting out will be around the price median for a given area. Too expensive of a home, and it will be hard to get what is needed in monthly rent. The exceptions being vacation homes, and the luxury market.

The other end of the spectrum is even more problematic. A $40k house will have many cost items that are the same as a $160k house. Here is a list for example:

Appraisal: $200-$400. The house size can influence price, but not by much.

Home Inspection: $200-$500 depending on tests performed. It is similar to appraisal, but can vary a little more with house size. Most of the inspection will be a fixed cost.

Plumbing: Trip fees and simple fixes will be the same. Toilets will be the same.

Mortgages and titling fees generally disregard house size.

Cable TV, and utility service fees will be the same

Evictions will cost the same

Liability issues will be roughly the same

While this list has exceptions, its purpose is to provoke thought about the “good deals” to be had in low cost houses. Always make sure to do your own due diligence before making any kind of investment, and if unsure…consult a local professional advisor.

About Steve @ FPO
Hello FPO readers, I have been writing on financial topics for about 12 years now, but I have only recently reignited the fire of publishing online. I have to say, its good to be back. I am an electrical engineer by trade who enjoys all topics engineering and financial. I started Financial Place Online (FPO) to create a value added financial news and education website that would provide a refreshing daily financial read. Financial Place Online websites are built around the principles of consumer empowerment, leveling the playing field, zero spam tolerance, and none of those annoying sidebar or banner ads. For us, it's all about enjoying a good read.

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