Owner-finance opportunity in popular STR & MTR community in Durham, NC

[Brandon Vanderford]

I am the listing agent for a property whose current owner is open to owner-financing. The address is 807 W. Trinity Ave, Unit 143 in Durham. It is a popular address for Airbnbs; I have managed approximately two dozen units in that community.

The list price for the property is $280,000. The most recently sold unit in this community sold in late September for $290,500. The terms of the owner finance deal would be 20% down (56K) and then an amortization period of 20 years at 0% interest, coming to $933.33 per month. HOA dues are $360/month, but cover internet, cable, water, sewer, and the unit exterior. Property taxes are $131.83/month. Before insurance and electricity, this brings the holding cost to $1425.16/month. With a few upgrades and nice furnishings, these units can usually bring in $1600-$1800/month when leased on Airbnb.

Rates seem to be averaging 8.03% for investment properties. Assuming the same selling price, down payment, and loan term, the monthly mortgage would be around $1,878/month without this owner-financing opportunity. Add taxes and HOA fees, and that number comes to $2,369.83/month, which is clearly not workable.

Effectively, owner-financing would save investors nearly $944.67/month, which makes this deal workable.

For MTRs and STRs, I charge a management fee of 25% on collected rent income. If the buyer had to hire management services, it is likely that this property would not break even. 

However, if a prospective buyer was interested in partnering with me to purchase this property, I would propose the following terms. The buyer covers the down payment and closing costs, we split ownership of the property 60/40 (I would take 40), and we split all maintenance and furnishing costs. Because I have ownership in the property, I will not charge any management fees (regularly 25% for properties of this type; averaging $450/month). Profit is likely to only be in the zone of $100/month initially, but will improve as rents go up in the future (with both city growth and inflation as contributing factors). The condo will be fully paid off in twenty years, and profit will increase significantly.

The cash-on-cash return is admittedly subpar. In my opinion, the ideal partner for this type of investment would be a cash-rich, possibly retired individual who wants a positive cash-flow property that essentially functions as a “cash-storage” asset. The "built-in" PM essentially makes it zero-maintenance.

Photos of the property can be viewed here:

https://drive.google.com/drive/folders/1nItc2eDUGRgRwonTPgLBtIrlIW48-9jB?usp=drive_link

Feel free to message me with any questions.