Does this investment make any sense???

5 Replies

Hi all, I'm new to the group and to investing overall.  I've been a licensed agent for 19-years and have owned a couple of rental properties in the past, but haven't ever helped a client.  I have what feels like a unique situation and wanted to throw it out to the group to see if anyone has any thoughts.  We had a homeowner reach out to us recently who would like to sell his house (tax reasons), but turn around and rent it back.  He and his daughter love the home and the neighborhood/schools/etc.  

In running a market analysis on the home, I believe it would sell for $585,000 or so on the open market (normal sale).  He has used this home as a rental in the past prior to moving back in and said he's gotten about $3000/month for it.  I've tried using the calculators to see if this would make sense for an investor but can't see a way that it does.   Am I missing anything?  At what price point does $3000/month in rent make sense, or asked another way, what rent would be needed to make $585,000 make sense?

Thanks in advance for any thoughts on the matter.  Happy to discuss off-line if that's easier.  FYI: Scottsdale AZ market, so great appreciation on the horizon

@Doug Baldwin  You ask   "At what price point does $3000/month in rent make sense,"

I would put the sale price at $225K to $250K.

At $585K you are looking at a $6000 a month rental . 

The numbers dont work well on high dollar properties . 

Ok can you elaborate on the details - why the owner wants to sell & lease back? How long does he want to lease it?  What is financial situation on the property (1st loan balance,2nd etc.)?