Why Homebuyers and Investors Are Racing to Buy Cheap Homes in 2025
In a real estate market shaped by rising interest rates, tight inventory, and affordability challenges, cheap homes are now the cornerstone of strategy for both homebuyers and investors. For everyday buyers, low-cost homes offer a path to ownership without taking on excessive debt. For investors, they create opportunities to flip, rent, or hold for appreciation—without overleveraging.
According to ATTOM Data Solutions, homes priced under $150,000 made up nearly a quarter of all investment purchases in 2024. But it’s not just investors taking notice. First-time homebuyers purchased more properties under $200K in Q4 2024 than in any quarter since 2017.
Finding these deals in 2025 takes more than a basic MLS search. It requires access to accurate comps, real-time data, and the ability to move quickly. In this article, we’ll walk through where to find cheap homes, how to evaluate them smartly, and how tools like FlipSquad can help you secure better deals—whether you’re buying your next home or your next investment.
🏡 Why Cheap Homes Offer Big Value in Today’s Market
Cheap doesn’t mean low-quality. Many properties priced under $150,000 are located in up-and-coming areas, older suburbs, or secondary cities that are now gaining attention due to affordability and infrastructure investment.
For homebuyers, cheap homes offer:
- Lower mortgage payments and easier financing approvals
- The chance to build equity through sweat equity (renovations)
- Reduced financial risk in volatile economic periods
For investors, they offer:
- Higher rental yield per dollar invested
- Easier entry for cash purchases or BRRRR strategies
- Greater ROI potential with modest renovations
📈 According to a 2024 study by BiggerPockets, investors in the sub-$150K category reported an average gross flipping ROI of 29.4%, while long-term rental yields exceeded 10% in certain Midwest markets.
🌆 Top U.S. Cities for Buying Cheap Homes in 2025
Some cities consistently offer the best balance of low entry cost, strong rental demand, and long-term appreciation. These markets are ideal for both homebuyers looking for affordable entry points and investors seeking cash flow or equity gains.
| City | Median Price (Q1 2025) | Rental Yield | 1-Year Price Growth |
|---|---|---|---|
| Cleveland, OH | $98,400 | 12.1% | 5.4% |
| Detroit, MI | $88,900 | 11.8% | 4.9% |
| Buffalo, NY | $141,300 | 9.5% | 6.1% |
| Tulsa, OK | $132,000 | 10.6% | 6.8% |
| Birmingham, AL | $125,200 | 10.2% | 6.7% |
Sources: FlipSquad market analysis, Redfin, Mashvisor (Q1 2025)
These cities are seeing renewed interest from buyers priced out of major metros. They also offer favorable landlord laws, strong rental demand, and active community development programs.
Want more data on where flipping is thriving? Check out our guide to the best cities to flip houses in 2025.
🔍 How to Evaluate a Cheap Home the Smart Way
Not every affordable property is a good deal. Whether you’re buying for yourself or investing, it’s critical to evaluate these homes with both financial and practical criteria in mind.
1. Understand the Rent-to-Value or Cost-to-Income Ratio
- Investors look for a rent-to-value ratio (monthly rent ÷ property price) of 1% or more.
- Homebuyers should consider housing costs as a percentage of gross income. The general rule: spend no more than 28% on housing.
💡 Example: A $125,000 home renting for $1,250/month meets the 1% rule. A buyer earning $75K per year paying $1,750/month for the same property is below the 28% threshold.
2. Calculate Total Projected Costs
Cheap homes often need renovation. Use FlipSquad’s integrated estimate tools to analyze:
- Roofing, HVAC, or foundation repairs
- Cosmetic updates (flooring, paint, kitchen)
- Holding costs or rent-ready expenses
📊 According to HomeAdvisor, average full-home renovation costs in 2024 ranged from $30 to $60 per square foot.
3. Compare Against Local Comps
You’ll need to know what similar homes in the area are selling for or renting at. FlipSquad provides live comps on every property, including recently sold listings and rental performance in the area—giving both homebuyers and investors the confidence to act.
🚩 Red Flags: When a Cheap Home Isn’t a Good Deal
Some cheap homes come with issues that outweigh the low purchase price. Watch out for:
- High-crime zip codes with stagnant price growth
- Uninsurable properties (due to condition or zoning)
- Repeated title issues, unpaid liens, or tax delinquency
- Neighborhoods with 15%+ vacancy rates
💬 Investor insight: In a 2024 LendingTree survey, 38% of buyers who skipped inspections on distressed homes reported $15,000 or more in unplanned repairs within the first year.
📍 The Role of Location in Cheap Property Success
Affordability is only half the story—location drives value. You want to look at:
- School district ratings (even as an investor)
- Walkability and nearby amenities
- Public transit or highway access
- Employment growth in the area
📈 A Freddie Mac report found that zip codes with job growth above 2.5% annually saw home values rise 35% faster than areas with flat or negative job growth.
Even among cheap homes, one street can dramatically outperform another. That’s why tools like FlipSquad don’t just show prices—they contextualize them.
Want to dig deeper into neighborhood analysis? Here’s how to analyze a neighborhood before you buy using local trends and data points.
🧰 FlipSquad: The Smart Way to Find Cheap Homes with Potential
Whether you’re buying your next home or your next flip, speed and data matter. FlipSquad combines everything you need to act fast:
- Real-time market listings and alerts
- Neighborhood growth trends
- Rehab cost estimates
- Comparable sales and rental data
- Save + track properties for follow-up
📊 Users report saving 5–8 hours per week by letting FlipSquad filter high-potential properties automatically.
And while many tools focus only on investors, FlipSquad is built equally for homebuyers looking to make smart, long-term financial decisions in today’s competitive market.
✅ Final Thoughts: Cheap Doesn’t Mean Low Value
Cheap homes remain one of the best pathways to financial independence—whether you’re aiming to flip, rent, or finally own your first property. But the real advantage goes to buyers who combine smart strategy with fast, data-driven decisions.
In 2025, more people are skipping overpriced bidding wars and instead using tools like FlipSquad to buy smarter. With the right approach, cheap homes can lead to massive returns—and more importantly, less risk.
📣 Ready to Find Your Next Smart Deal?
FlipSquad helps homeowners and investors discover high-value opportunities before the competition. With live market data, real-time comps, and instant renovation estimates, you can act quickly—and confidently. Whether you’re flipping, renting, or buying your next home, FlipSquad gives you the tools to make smarter real estate decisions.