First rental property!!!

[Keegan Schaub]

I am under contract for an 8 bed/8 private bath SFH located in Kansas City, Kansas

Purchase price: $375,000

Appraisal from 2020: $512,000

Downsides: waived inspection on a 100 year old previously renovated property and per zoning, cannot do STR (30+ days only)

My brother will live in it free to help manage and plan will be to rent out to travel healthcare workers with two nearby level 1 trauma hospitals within a mile distance.

I feel like I hit jackpot with this first investment property with $137k potential equity from the 2020 appraisal. COC return between 30-45% depending on avg market rent 700-850/mo for the area, 2-3k cashflow per month. Absolute worst case scenario 600/mo still yields 20% COC return.

With the super hot housing market, did I get lucky finding this deal? What am I missing?

Assuming everything goes as planned, will do a cash out refi in six months to keep scaling with the potential equity.

https://www.redfin.com/KS/Kans...

[Keegan Schaub]

Quote from @Randall Alan:

So it will be a boarding house with 8 strangers living under the same roof sharing common areas?  One kitchen?  One living room? Just how that all works out is what I’m missing!   I’m a long term rental guy… so don’t take me too much to heart, but sounds messy at best!  

Random thoughts… what about hot water… how many tanks for 8 people trying to shower in the morning… much less what will the water pressure be like?  Noise issues might be a concern.  I would  definitely check with your insurance agent.   How will food be separated?  8 people sharing one stove, one pantry?  Your rents look high to me for one bedroom and shared ‘everything else’… but I’m not into boarding houses, so I may be out of touch there.

Maybe some bad assumptions?  Tell us more

Randy

 The previous owner used it as a rental for ballet students and traveling healthcare workers. The property has two hot water heaters and I bought it furnished with a bed/cabinet/mini fridge in every room. Each bedroom door has its own keypad lock with the private bathroom in each bedroom.