I met with a client earlier this week who has funds available to purchase an investment property, and we were contemplating what might make the most sense in the Harrisonburg.  Here's what we came up with...

Seek properties listed at prices under market value in neighborhoods (subdivisions) where it is easy to understand market value.

If we consider, for a moment, townhouses and duplexes in the City of Harrisonburg --- we find that most of these properties are barely viable investment properties given their current market value and the rental income that they can generate.  Most new-ish two-story townhomes in the City are selling between $155k and $165k, and might generate $850-$950 per month in rental income.  When you consider 80% financing, insurance, taxes, association fees, you'll likely have (on average) $900 of rental income to offset (roughly) $900 of monthly expense.

This "barely break even" scenario can make sense to some investors --- they are not only in it for the monthly cash flow, but also for the tax savings, principal reduction and appreciation.  But consider this --- if you can purchase a townhome in one of these communities between $135k and $145k, the scenario can be quite different.  Dropping the purchase price by $20k reduces your monthly obligations by approximately $110, which creates a nice buffer between income and expenses.  Furthermore, you will likely be picking up some "instant equity" because you are buying below market value.

A few important notes:

1. You likely won't be able to purchase any property $20k below asking price or $20k below market value.  There are, however, some properties for which this would be possible.  Sometimes we can determine that by the asking price of the property compared to recent sale prices in the neighborhood.  Sometimes we can determine that by when the owner bought the property, which might suggest how much they need to make the deal work.  Sometimes we can only determine that by making offers on properties.
2. One important caution --- don't get too excited about the "instant equity" right off the bat.  If you buy a townhouse $20k below market value in that neighborhood, and then several other owners sell at that same price point, your perceived equity will have vanished for the time being.

If you have funds available (10% - 20% of the purchase price) to buy an investment property in Harrisonburg, I'd be more than happy to help you sort through the available properties to find some of your best options. 

Feel free to call me (540-578-0102) or e-mail me (scott@cbfunkhouser.com) to get started.