Buying Outside My Buy Box

Member since 2017 · 47 posts · 21 votes

3d

A good price doesn't fix a bad fit. 30% under market is equity on paper. You only get it if you sell. Every month in between you live on the rent.

So I'd price the rent off the smallest 2/1s you can find, not the average. 700 sq ft will sit at the bottom of that range. Then run it again with a manager's fee in it, even if you plan to self manage. Several hours away means somebody else shows it and takes the 9pm leak call. Mine are all in my own town for that reason, so I can't tell you remote is easy.

If it still hits your number with low rent and a manager, buy it. If it only works with top rent and you doing everything, the discount is the whole deal and I'd pass. Or buy it knowing the plan is to sell.

And since it's family, do the inspection and put it all in writing like you would with a stranger.

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Divin KanyamaBusiness Member

Accountant · Seattle, WA · Member since 2025 · 391 posts · 157 votes

3d

@Colin Graveen A 30% discount is attractive, but equity at closing does not automatically make it a good rental. I would evaluate it as if the seller were unrelated: use rent comps that closely match the unit’s 700-square-foot size, condition, location, and amenities, then underwrite management, vacancy, repairs, capital expenditures, and travel.

Because the property is several hours away and outside your buy box, I would want the returns to exceed—not merely approach—your normal target. The discount should compensate you for weaker rent certainty, remote ownership, and the risk of making a family transaction emotionally harder to unwind.

I would also confirm the market value with sold comps rather than relying on an estimated discount, and get rent opinions from two local property managers. If conservative rent still produces acceptable cash flow and the property has a clear resale margin, it may be worth pursuing. If the deal only works because it feels “too cheap to pass up,” that is usually a reason to pause.

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Hossein Sharifi

Technology · Member since 2023 · 63 posts · 27 votes

3d

Both replies are right on rent comps and management. The other half of the decision is that you're choosing between two outcomes, and it helps to run both.

Example (swap in your numbers): market value $200K, you pay $140K.

1. Hold: rent at the low end of the 2/1s, say $1,000. Take out 8% vacancy, 10% for a manager, taxes and insurance, and 10-12% for repairs and capex. That typically leaves a net of roughly 4-5% on $140K. That's the number to compare to your target ROI, not the calculator's headline.

2. Buy and sell: $60K of equity less about 7% selling costs ($14K), plus carry and a few trips, nets roughly $35-40K. That's a real return on a short hold, and it doesn't depend on rent at all.

If the hold case clears your target with a manager in it, keep it. If only the sell case works, treat the deal as a flip and decide whether $35-40K is worth the work. Get a written purchase contract and an independent appraisal or at least sold comps either way, so the 70% is real.

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G. Brian DavisPro Member

Investor · Hatboro, PA · Member since 2016 · 3k+ posts · 866 votes

3d

I’d be careful about letting the 30% discount make the decision for you. A good purchase price helps, but it doesn’t fix a property that doesn’t fit your strategy or is going to be difficult to manage from several hours away.

I’d figure out what the property is realistically worth as a rental, especially given the smaller 700-square-foot layout, and run the numbers using conservative rent and expenses.

If it still meets your return target and you have a good plan for managing it remotely, I’d take a serious look. If the numbers are only attractive because you’re buying it cheaply, I’d probably pass.

Sometimes the best deal is the one you don’t buy.

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Simon W.Business Member

Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 668 votes

3d

Buying at 70% of value is nice, but it only helps you when you sell or refinance. Month to month, you still have to live with the rent the unit actually gets.

I'd price the rent off the smaller units, not the bigger 2 bed comps, and see if it still works with a property manager since you're a few hours away. Put in real numbers for vacancy, repairs, and capex too, because a smaller older unit can still have the same roof and furnace bills.

If it only works with optimistic rent, I'd pass or ask your uncle about seller financing to make the numbers work. And if you do buy it, get the price and terms in writing even though it's family. It keeps things clean if anyone asks later why it sold under market.

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Arman AhmedPro Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 944 votes

2d

Quote from @Colin Graveen:

I have an opportunity to purchase a rental property from an uncle of mine in a market several hours away from me. The property strays far away from my buy box. This typically isn't an issue for me to pass on but what keeps bringing me back is the amount my uncle is willing to sell it to me for. I'd be able to get into it at about 70% what it could sell for in the market it is in. As I look for compareable rents in the area, I've noticed that most of the units available that are also 2 bed/1 bath are much larger than this one which is around 700 sq ft which concerns me about the amount of rent i could charge. From the rental property calculator, it's not showing I would make very impressive returns on it although they would still be close to my target ROI. I was hopign to get some feedback from others with more experience than me and how they manage deals like this they come across.

Thank you!

Colin

Buying a property purely because it's discounted is one of the easiest ways to get stuck with an illiquid asset that drains your mental energy. If a small 700 sq ft 2/1 in a remote market barely hits your baseline ROI even with a 30% equity discount, the operational overhead of long-distance management and tenant turnover will quickly eat whatever margin you think you have. Unless you can pick it up on seller-financed terms, assign/wholesale the contract to another investor to capture that 30% equity spread as quick cash, or execute a quick cosmetic flip to harvest the equity.

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Caleb Brown

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

2d

What about it is off from your buy box? Is it the return or what else?

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Gregory AcsPro Member

Lender · MD · Member since 2025 · 203 posts · 83 votes

1d

Hi Colin,

Buying below market value is definitely attractive, but I wouldn't let the discount alone drive the decision. If the property doesn't fit your long-term strategy or the rental income isn't there, it can still become a mediocre investment.

I'd verify the market rent by talking to a few local property managers rather than relying only on online listings, especially since the comparable units are much larger. I'd also factor in property management costs since it's several hours away. If the deal still meets your return goals after using conservative rent estimates and realistic expenses, it could be worth considering despite being outside your usual buy box.

I'm a mortgage broker and work with investors evaluating rental properties. If you'd like to compare financing scenarios or run the numbers on the deal, feel free to send me a message.

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Mark UpdegraffBusiness Member

Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 701 votes

1d

@Colin Graveen I’d evaluate this exactly as though you were purchasing the property from someone you didn’t know.

What’s the actual market value? What will it produce after realistic expenses, maintenance, capital expenditures and professional management?

Being several hours away introduces another variable. You need reliable local contractors and someone who can respond when something goes wrong.

A substantial discount can justify reconsidering your investment criteria, but it doesn’t automatically make the property a good investment.

The question I’d ask myself is whether I’d still want the property at that price if my uncle wasn’t the seller.

If the answer is no, I’d be cautious about making an exception.

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Buying Outside My Buy Box

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