I am no stranger to selling cheap houses.  In 2008 & 2009, I sold well over 100 homes that were priced under $50k with the majority under $40k.  My cheapest house I sold was $12,500 back in March of 2009 (the bank netted $69 on the deal-read the post on my Saint Paul Real Estate site).

So with that all said, it was amazing to be out with a customer of mine the other day looking at condos in Brooklyn Park.  We looked at 4 that were priced at $19,900.  I remember saying to him “I can’t believe I am about to say this, but this condo is too expensive.”  Wow!   I would say even the cheapest new car these days costs more than $19,900.  So why did I say that?  Here is how the numbers break down:

While $90 is not the worst cash flow I have ever seen, if this customer ever has to replace the flooring in the unit, it would require an entire year to pay back the cost of it!   We started talking about offering $15k for the unit and even at that price it is still not enough cash flow to make it worth it.  Now you could pay cash for this unit, but is it really that great a use of your money to get $146 per month for your $20k?

You can’t make every deal work.  Making it cheaper doesn’t always solve the problem.