Buying rentals under $100K works when the price-to-rent relationship and the financing line up, not just because the sticker price is low. Josh Yeatts, a buy-and-hold investor operating in and around Danville, Virginia, buys in a narrow band — roughly $70,000 or step up to about $100,000 — partly because his DSCR lender allows 15% down at the $100,000 mark instead of 20%. Everything he buys is a 2 bed, 1 bath single family house renting for $1,000 to $1,200.
That combination — a tight buy box, a lender threshold, a required refinance pull of $20,000 to $30,000, and a rehab scope that deliberately excludes roof, HVAC and plumbing work — is what makes the model repeatable in a market where houses were selling for $40,000 to $50,000a few years ago.
Below: how the down payment math changes on small loan balances, what rent a cheap house has to command, how much cash a refi realistically has to return before the deal earns a spot in the portfolio, which rehab items he actually spends on, and how he sources deals in a thin market where a casino opening has moved prices.
Key takeaways
- Ask your DSCR lender where their down payment tiers break. Yeatts’ lender allows 15% down at a $100,000 purchase price versus 20% below it, which is part of why he either buys around $70K or steps up to $100K rather than landing in between.
- Yeatts underwrites a 2/1 single family against $1,000–$1,200 in monthly rent — roughly 1.4% of price at $70K and 1% at $100K.
- He will not buy unless the planned cash-out refinance returns $20,000 to $30,000, because that pull funds the next down payment instead of new savings.
- Newer HVAC, sound plumbing and a decent roof are screening criteria, not rehab line items. The scope he actually pays for is paint, trim, countertops, cabinets, and swapping out old two-prong receptacles and painted-over cover plates.
- One near-exclusive realtor relationship producing pre-market listings, plus a lender and title company he can text, does more for deal flow in a small market than broad marketing — his title company discounts his work based on refinance and purchase volume.
From the Real Estate Pros Show
This article draws on an interview with Josh Yeatts of S&J Rental Properties on the Real Estate Pros Show, hosted by Cody Crabb.
Why the $70K to $100K Price Band Is a Financing Decision, Not Just a Bargain
Yeatts does not shop a range. He shops two points: around $70,000, or step up to roughly $100,000. The reason is the lender, not the inventory.
“If I’m going to go much over that, I’d rather just shoot for $100,000,” he said. “At that $100,000 mark, my lender will let me do 15% down. So I can do 15% down rather than 20% down.”
On small balances, that five-point difference matters more than it looks. Twenty percent down on a $70,000 house is $14,000. Fifteen percent down on a $100,000 house is $15,000. For an extra $1,000 of cash at closing, he controls $30,000 more in asset value and a better house. Buying at $85,000 with 20% down — $17,000 — is the worst of both: more cash out of pocket than either endpoint, and no tier benefit.
Two cautions. First, that 15% threshold is his lender’s program, not an industry rule. DSCR down payment tiers, minimum loan amounts and pricing adjustments vary widely between lenders, and some will not write a loan below a certain balance at all. The action item is not to copy the number, it is to call your lender and ask where their tiers break, then buy on the right side of the line.
Second, small loan balances carry fixed costs that do not shrink with the loan. Title, appraisal, and origination on a $60,000 loan eat a larger share of the deal than on a $300,000 loan. Yeatts partly offsets this by concentrating volume with one title company that discounts his work.
The Buy Box: 2 Bed, 1 Bath, Single Family, $1,000 to $1,200 Rent
Every rental Yeatts has bought as an intentional acquisition is the same thing: a two bedroom, one bath single family house within about 20 to 30 minutes of Danville. In his area, that unit rents for $1,000 to $1,200 a month.
Run that against his two price points:
- $70,000 purchase, $1,100 rent — about 1.57% of purchase price per month. Debt service on a 15%-to-20%-down DSCR loan at that balance leaves real room for taxes, insurance, vacancy and repairs.
- $100,000 purchase, $1,200 rent — about 1.2% per month. Still workable, but the margin for a bad tenant or a surprise repair is thinner, and the rent ceiling for a 2/1 does not move just because you paid more.
That is the real constraint on stepping up in price: rent for a 2/1 in this market tops out around $1,200 regardless. So the $100,000 buy only makes sense when the down payment advantage and the after-repair value support the refinance — which is why Yeatts underwrites the exit before the purchase.
The second benefit of a narrow box is deal flow. Yeatts’ realtor knows exactly what he wants without being asked. “He knows I’m kind of always looking, even if I haven’t come out and said, hey, I’m ready to buy one.” A realtor can pattern-match a 2/1 single family in a 30-minute radius instantly. Tell an agent you’ll look at “anything with good numbers” and you get nothing, because nothing obviously fits.
He is now starting to look at multifamily, but the single-family box is what built the portfolio.
I make sure that whatever I do to it, I can increase that value enough to hopefully pull out maybe $20,000 or $30,000 for the next one.
— Josh Yeatts, S&J Rental Properties, Danville, Virginia
Buying to Refinance: Requiring a $20K to $30K Pull Before You Buy
Yeatts buys with the refinance already modeled. The test is simple: after light work, will the cash-out return $20,000 to $30,000?
“I make sure that whatever I do to it, I can increase that value enough to hopefully pull out maybe $20,000 or $30,000 for the next one,” he said. That figure is not arbitrary — it is roughly one down payment plus closing costs and rehab money in his price band. Hit it and the next purchase is funded. Miss it and the deal stalls the machine, because the alternative is saving up cash again from a W-2 and a tax refund.
Three of his six doors were acquired this way: buy under market, light cosmetic work, refinance, redeploy. The other three came from family situations rather than the open market.
The larger version of the same move is in progress. The house his grandparents transferred to him sits free and clear, and he is putting a mortgage on it to pull out $130,000 — earmarked for five or six more small single family houses in his area. At $70,000 to $100,000 purchase prices with 15% to 20% down, $130,000 covers that many down payments with rehab money left over.
Note the discipline: he treats a paid-off house as idle capital rather than a finish line. He is going from no mortgage to a mortgage on purpose, because the equity does more work spread across six cash-flowing doors than sitting in one. That trade only pencils if each of those six clears debt service, which is exactly what the buy box protects.
Rehab Scope: What He Fixes and What Disqualifies a Property
Yeatts keeps his rehab cosmetic by screening out capital expenses at the offer stage. The big-ticket items are deal-killers, not line items.
Deal-killer list — walk if these need work:
- HVAC that is not reasonably new
- Plumbing that is not sound
- A roof that is not in decent shape
Punch list — what he actually pays for:
- Paint throughout
- Countertops
- Cabinets — painted if they’re decent, replaced if they’re not
- Trim
- Receptacles and cover plates
“Paint just makes everything look 100% different,” he said. The screening logic is straightforward: a new roof or HVAC system on a $70,000 house can consume the entire $20,000–$30,000 of value creation the refinance depends on, and it adds weeks of timeline while adding little to appraised value or achievable rent.
The electrical detail is worth stealing. Old two-prong receptacles with cover plates that have been painted over a dozen times read as “old house” to a tenant even when everything else looks fresh.
“If you go in a house and everything looks great, but it has the old two-prong receptacles that have been painted over a dozen times — believe it or not, it makes a big difference,” Yeatts said. “You just go in and replace all those receptacles and the plate covers, and that freshens it up along with the trim and the paint.”
It is cheap per unit and fast, and it removes one of the few visual cues a renter can’t ignore. Electrical work should go to a licensed electrician where your jurisdiction requires it.
Sourcing Deals in a Thin Market: Agent Relationships and Off-Market Sellers
In a market this small, deal flow is relationships, not volume marketing. Yeatts works near-exclusively with one realtor who calls him on listings before they hit the MLS: “I have this listing that just popped up you might be interested in. It hasn’t went on the market yet, so it might be a good time to grab it.”
His best off-market example came from a Facebook for-sale-by-owner post. The seller was asking $90,000. Yeatts offered $75,000 and got a flat no — they were going to find someone else. A week later they called him back and took the $75,000. The lesson is not the discount, it’s the follow-up mechanic: a rejected offer on a for-sale-by-owner listing is not dead, it is pending. Leave the number on the table and let the seller’s timeline do the negotiating.
He treats his vendors as staff without a payroll. “I have the realtor that I work with, the lender — I can personally call him up or text him whenever and be like, hey, will this work?” The title company came to him with pricing: between refinances and purchases, he was sending enough volume that they offered discounts. On $70,000 to $100,000 deals with a refinance attached to every one, closing cost concessions are a meaningful share of return.
One market note that matters for underwriting: houses in the Danville area could be bought for $40,000 to $50,000 until a few years ago. A Caesars casino opened and prices have been climbing since, with fewer of those bottom-tier houses available. Cheap markets do not stay cheap on their own schedule, and a single large employer can reset the floor.
Getting Started Without Cash: House Hacking and Family Arrangements
Yeatts’ advice to anyone in their late teens through their thirties without a down payment is to buy a house you live in and rent the extra space.
“I tell every person that’s in their 20s — 18, 19, 20, even in their 30s, if they’re single — try to buy a house and rent a room out, or buy a duplex if you’re able to, or a triplex,” he said. “You can put 3.5% or 5% down as an owner-occupant.” His own regret is not doing it sooner: “If I had known starting out, I would have rented out rooms in my house and made that mortgage payment, and saved the money I would have been using for a mortgage to buy other rental properties.”
The scaled-up version happened in his family last year. His grandparents owned their house free and clear and wanted zero maintenance. He bought a house over 4,000 square feet with a basement that became an apartment and a separate wing. His grandparents moved into the basement apartment; his parents wanted in and took the wing. Both of their mortgage-free houses went into his LLC and got rented out, along with the house he had been living in. The rents cover the mortgage on the house he now occupies.
That structure produced three doors and eliminated his own housing payment without a purchase down payment for each unit. It also involves title transfers between family members and an LLC, which carry real legal, tax, insurance and lender implications — including how existing mortgages and homeowners policies respond to a transfer. Run any version of this past an attorney and a CPA before deeds move.
Frequently asked questions
Can you get a DSCR loan on a house under $100,000?
Yes, but the terms shift at low balances and not every lender will do it. Yeatts finances sub-$100K purchases with DSCR loans routinely, and his lender allows 15% down at the $100,000 mark versus 20% below it. Other lenders set minimum loan amounts, higher minimum down payments, or price adjustments that make small balances unattractive.
Before you go under contract in this price band, confirm three things with your lender: minimum loan amount, down payment tiers by purchase price, and total closing costs in dollars rather than percentages. On a $60,000 loan, fixed fees matter more than rate.
What rent-to-price ratio should a cheap rental hit to be worth buying?
Yeatts’ deals land between roughly 1.2% and 1.6% of purchase price in monthly rent — a $70,000 house renting for $1,000 to $1,200, or a $100,000 house at the top of that rent range. The ratio matters more on cheap houses because taxes, insurance and a single repair are a larger share of gross rent.
The real constraint is the rent ceiling for the property type. A 2 bed, 1 bath in his market commands $1,000 to $1,200 whether he paid $70,000 or $100,000, so paying more compresses the ratio without any offsetting income.
How much cash should a BRRRR refinance return before the deal is worth doing?
Enough to fund the next down payment plus rehab. For Yeatts in a $70K–$100K market, that number is $20,000 to $30,000, and he underwrites it before he offers.
Set your own threshold by adding your typical down payment, closing costs and rehab budget together. If the projected pull comes in below that, the deal breaks the cycle — you’ll be waiting on savings for the next purchase instead of recycling capital.
Which rehab items add the most value on a low-priced rental?
Paint first, then trim, countertops and cabinets — and Yeatts singles out replacing old two-prong receptacles and painted-over cover plates as punching well above their cost. Those small electrical fixtures are one of the few things a prospective tenant reads instantly as “old house,” even in a freshly painted room.
What does not belong in the scope on a cheap rental is roof, HVAC or plumbing. Yeatts screens those out at the offer stage rather than budgeting for them, because a single capital item can consume the entire equity gain the refinance depends on.
Is it better to buy several $70K houses or one $200K property?
It depends on which one your lender and your rent ceiling support. Several cheap houses spread vacancy risk across more units and, in Yeatts’ market, produce a stronger rent-to-price ratio — but each closing carries its own fixed costs and each roof is its own future capital expense.
Yeatts chose multiple small houses and is deploying a $130,000 cash-out across five or six of them rather than one larger purchase. His reasoning is capacity: each $70K–$100K house is a repeatable transaction he can underwrite and rehab himself, in a market and property type he knows.
The bottom line
Call your DSCR lender this week and ask exactly where their down payment tiers break and what their minimum loan amount is — then set your purchase price band around those two numbers instead of around what looks cheap. Every other decision in this model, from the buy box to the required refinance pull, hangs off that answer.
