Turn key rental property deal

[David Niu]

Hello all BP friends,

I am a newer investor and currently own a duplex and self manage. The situation below is in Westland, Michigan area.

I have a possible deal with a friend that is wanting to buy her first house, however she is currently in school and cannot qualify for financing.

I have structured a deal that I would buy a house for her, under a 5% conv. Loan, where she then rents from me, covering all expenses plus a 200$ cash flow each month. However she wants the buy back the house a year and a half later when she finishes school and able to qualify for financing.

The house will be around 200k. I will need around 11-12k cash at closing. How much equity will I accrue after the year and a half? Plus the $3600 in cash flow over 1.5 years. Is this worth it when I go sell the house after a year and a half? I have also structured the deal where if Market crashes she has to buy the house at what I paid for it, but if not she will buy it at market rate.

I appreciate all of you and your time on reading this! Please advise. I will gladly answer any questions if my post was not clear enough.

Stay healthy and wealthy, my friends!

[Ryan Xu]

This deal doesn't sound right. First, the first 18 months equity you'll have will be around 5k. Secondly, plus the cash follow still not able to recover your upfront cost. In other words, unless it appreciates significantly which Westland that I'm familiar with likely will not, it's a bad deal.

If that's a friend you wanna help, introduce her program like home partner will be good enough