Turn key Single family house investment

[Chase Titherington]

I am looking to invest in a single family house, this is a turn key investment with a positive cash flow. This will be a 80/20 split with the bank and the seller will finance the other 20% on a 10 year loan I will cover the closing costs. It is roughly 150$ positive cash flow per month. Is holding this investment for a couple years (eventually sell for the equity) to risky? 

[David Alvarado]

It depends. Are you buying with any equity built in on the front end? What is the market like where this property is located? Seller finance is amortizing I'm assuming? Maybe consider looking at an amortization table to see how much you'll have paid down the loans in year 2 and where that puts you versus what you think the house would be worth or what it's been worth historically (back between 2008-2009). One thing to also consider is the cost to transact - not inexpensive to sell or buy a home so your total basis and projected net should include all transactional costs and some reserves over the period of ownership. 

I'd say if you are buying it below market value and it is an area that has seen steady growth over time then generally you should be ok, but at this time in the cycle the idea is to be under leveraged to ride out potential flattening and softening of the market. The good thing you have going is that you are getting relatively long term debt on the property so you should be able to ride out any potential issues down the line if you can't sell and make a profit in 2-3 years. 

[Tom Ott]

Originally posted by @Chase Titherington:

I am looking to invest in a single family house, this is a turn key investment with a positive cash flow. This will be a 80/20 split with the bank and the seller will finance the other 20% on a 10 year loan I will cover the closing costs. It is roughly 150$ positive cash flow per month. Is holding this investment for a couple years (eventually sell for the equity) to risky? 

 A Turnkey can be a great investment, but only if you go through a real Turnkey provider. They should own the home, renovate it first, place a tenant, AND THEN sell it to you. They should also provide management after the sale, and not use a third-party company. 

[Mark Hart]

@Chase Titherington Tom is correct. Also make sure you are familiar and confident about the area!