Really excited about this deal, thoughts?
Hey BP, about to close on an awesome deal (or at least I think so), would love to hear your feedback! Found a single family home (for sale by owner) which has a long term tenant staying on property upon closing. Here are the details:
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Purchase price: $66k ARV: $110k Mortgage: $487 (5.25%, 20% down, 30 years) Gross monthly rent: $850 Net cash flow: $363/month
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The tenant wants to stay for "as long I'll let him stay". The home could use a refresh like new flooring and paint, but is structurally sound and has a new roof and HVAC system. However, if I do the requested refresh, I feel like I should raise the rent by at least $25-50. Any thoughts on this? I typically hate to raise rent upon acquisition on existing tenants.
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@Navid A. congrats as this sounds like an awesome deal & a home run. If it was me I’d wait until his lease is up before raising rents. My PM raises rent on a sliding scale for renewed leases which seems to work well ...month to month is 10% increase. 1year lease is 5% increase and 18 month is 4% and 2 year lease is 3%. I’m currently offering 1/2 month free rent special if they choose the 2 year lease option as I hate turnovers. Trust me if this guy is a good tenant and long term you want to keep him as long as possible & treat him well.