Home with renter already in place

[Chris Atteberry]

There is a home listed for 79k and it has a renter already in place with a one year lease. The current lease is for 600 a month and the property owner pays all utilities. By my calculations you are in the hole before you even start the month at that list price. Current rent in the area is about 900 a month for comparable properties I feel like 79k for the house is a good price but not with the current lease that is in place. Any advice? Thinking of throwing out an offer that makes sense with a 600 a month lease of about 50k. 

[Marshall Leipprandt]

@Chris Atteberry To clarify - you are thinking of offering $50K on a house listed at $79K because of the current rent that the property commands? Unless the house has been on the market a very long time or the seller's are desperate, I wouldn't waste you or your realtors time making that offer. Single family homes are not valued like multifamily properties, and although it makes sense to you coming from a buyer/investor's mindset, the seller has the opposite mentality which is "this house could easily rent for $900 at market rates". 

The property also generally seems like it wouldn't be a great investment. Once you factor in maintenance, cap-ex, utilities, insurance, taxes, property management, etc., it seems like you'll be cash flowing negative. At that price point, the property isn't going to be appreciating much, so I just don't see how this would be a sound deal for you to chase after.

I think finding a 2-4 unit multifamily and house-hacking would be a better bet. That way, you could live in one side while renting out the other(s) and even if you are not cash flowing, you would be offsetting your cost of living which will allow you to save more quickly for another property. Just my two cents.