1bed/ 1 bath-12k-would u buy it?

21 Replies

I recently was given an opportunity to buy a 1 bed/1 bath house from a friend. He has had a lot of success with these and prefers them.  Which is different than the other 95% of investors I have talked to. I have also heard that having several different types of real estate is a good idea. So I am curious why or why not would you buy this deal.

It is a 1 bed room house with bath. Totally rentable and should have a tenant shortly. Who would be locked in to a lease for 12 mos. It might be a c neighborhood. It does have a 1 car detached garage. House is about 600 sq ft.

Numbers:

Buy at 12k

Rent is 465/mo  (about 2 yrs to be paid off)

Ins about 300ish

taxes are 686/yr

317-514-9321

I am a new investor, have not completed a deal yet, but I want to give my 2 cents on this deal. Everything you have said to me just pops out as positivity. I do not know the area, I am just going by what you say, but there seems like there are many pros, and not too many cons. 

1. It is cheap, which means less risk and leverage on your part.

2. You know a guy in that niche, if something ever goes wrong and you need help, if he is truly an expert in the niche he will have an answer for you.

3. You said should have a tenant shortly, and for 12 months, which is a big plus since you do not have the place yet, and you may already have it filled. 

4. It's a 1/1 600 sq ft. That is good for capital expenditures(big repairs) and even small maintenance. Less sq ft of carpet, smaller roof etc. 

5. Paid off in 2 years? That's awesome. Extra $5580 per year when it is paid off less vacancy/repairs/reserves.

There is just one question, and this can be a con, but why is he selling? Is he a close friend and wants to build your portfolio with some cashflow? Is he liquidizing some of his portfolio? Is there any latent defects he may not be telling you? If the reason why he is selling is negative regarding the property then I would try to see what it is and see what it would cost to fix, then go over the numbers again. If it has nothing to do with the property in a negative way, I would lean towards making the deal. This is just my opinion though, and I have not owned any property yet, just trying to help!

Let us know what you decide to do!

@Kyle Alberry

Thanks for the response. Reason for selling is where it is. He has shifted most of his buy and holds to about 60 mins away and puts this at his farthest point to go. He is tired of the traveling and wants some cash for another project.

317-514-9321
Originally posted by @Chris Wood :

I recently was given an opportunity to buy a 1 bed/1 bath house from a friend. He has had a lot of success with these and prefers them.  Which is different than the other 95% of investors I have talked to. I have also heard that having several different types of real estate is a good idea. So I am curious why or why not would you buy this deal.

It is a 1 bed room house with bath. Totally rentable and should have a tenant shortly. Who would be locked in to a lease for 12 mos. It might be a c neighborhood. It does have a 1 car detached garage. House is about 600 sq ft.

Numbers:

Buy at 12k

Rent is 465/mo  (about 2 yrs to be paid off)

Ins about 300ish

taxes are 686/yr

Numbers work if you want to buy and hold.

The exit strategy is poor as no one wants to buy a 1 bedroom home.

I believe you will always be able to find tenants tho.

I would but it if you have the spare cash.

We had a quite a few pop up here in Toledo and I thought it would be fun owning a few 1 bedroom houses haha

Thanks and have a great day.

@Chris Wood I'd look harder as to why he's selling it for 12k.

I'd also look into the possibility of turning that 1br into a 2br...I have 2br homes that are even smaller than 600sq ft, if you can believe that.  Could be some great value there.

But start at why he's selling for 12k...that's low, even for a C neighborhood.

This property is local to you or long distance?

Originally posted by @Chris Wood :

@Kyle Alberry

Thanks for the response. Reason for selling is where it is. He has shifted most of his buy and holds to about 60 mins away and puts this at his farthest point to go. He is tired of the traveling and wants some cash for another project.

 Jus curious, if the numbers are so good then why does he have a management company. What is all the traveling about? Anyway take advantage good luck.

I own a 1 bedroom house and love it. Very similar numbers to yours. I own about 80 1 bedroom apartments and love them as well. Small space = small turnover costs. Also I usually get very long term tenants in these types of units as they tend to be older and just looking for a nice simple place to call home. I would shy away from younger transient types.

Originally posted by @Chris Wood :

I recently was given an opportunity to buy a 1 bed/1 bath house from a friend. He has had a lot of success with these and prefers them.  Which is different than the other 95% of investors I have talked to. I have also heard that having several different types of real estate is a good idea. So I am curious why or why not would you buy this deal.

It is a 1 bed room house with bath. Totally rentable and should have a tenant shortly. Who would be locked in to a lease for 12 mos. It might be a c neighborhood. It does have a 1 car detached garage. House is about 600 sq ft.

Numbers:

Buy at 12k

Rent is 465/mo  (about 2 yrs to be paid off)

Ins about 300ish

taxes are 686/yr

Are you selling this house ?

Thanks everyone for your responses. I did buy it and look forward to seeing what is going to happen with it!

317-514-9321

Congrats, Chris. I'm looking to do the same here in MO. Plenty of opportunity (in "C" neighborhoods) for sub-$30K homes. Mostly 2/1's but even 3/1's, which are even better (imho) for resale. But I don't think you can lose when it comes to a hold. 

Keep us informed as to your experiences owning this 'hold' property...

@Chris Wood

You can actually obtain financing for 10k and up. 

Can you get a rental history on the tenants or house history? What do the houses in the neighborhood go for? Great deal...... But not a great exit strategy as others have said. 

All positive responses here. I guess @Ben Leybovich hasn't seen your post yet. ;-)

Jerry Padilla, Lender in NY (#NMLS 1084877)
585-204-6923

Hey @Chris Wood there's a motivated seller in my town with a 1bedroom 1bath it's 580sq ft though. I'm going to look at it this coming week. After reading some of these responses here seems like a 1bedroom home is not too bad.

One thing about one bedrooms is always consider the size of the lot , check with the local building department and find out if the lot can take any more coverage meaning if more of the lot can be covered with the building. This may be a great chance to increase the square footage and market and rental values. Could be a very good win win situation. 

Originally posted by @Chris Wood :

I recently was given an opportunity to buy a 1 bed/1 bath house from a friend. He has had a lot of success with these and prefers them.  Which is different than the other 95% of investors I have talked to. I have also heard that having several different types of real estate is a good idea. So I am curious why or why not would you buy this deal.

It is a 1 bed room house with bath. Totally rentable and should have a tenant shortly. Who would be locked in to a lease for 12 mos. It might be a c neighborhood. It does have a 1 car detached garage. House is about 600 sq ft.

Numbers:

Buy at 12k

Rent is 465/mo  (about 2 yrs to be paid off)

Ins about 300ish

taxes are 686/yr

1bedroom house with bath - is it usually for single people, or small households?  Keep in mind such tenants can be more transient (ie. more turnover...)

Congrats on the purchase!

Do you have any visuals? I'm curious to what 12K can buy. 

Thanks in advance

Originally posted by @Allen Singer:

Are you selling this house ?

     Where are these houses located, how do I see them.

Originally posted by @Allen Singer:

Are you selling this house ?

    locations of these houses for sale.

   

@Allen Singer he bought this house.  Maybe search houses for sale in the marketplace.

@Allen Singer

As of right now the house is not for sale. I am planning on keeping for a year and trying it out, then I might sell it depending how many other rentals I have in that area.

thanks

317-514-9321

Also I will post pictures when I close.

thx

317-514-9321

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