Cashflow, selling investment property

18 Replies

I'm trying to sell my investment property, can someone help me on my cash flow analysis based on numbers I provide? It's valued in the range of 90K-98K.

Rent:$950
PI:$450
Renters insurance: $68/Month
Taxes: $87/Month
Maintenance:$50

It's in a great area and tenants are solid!!

Appreciate the help!

What about property management? Do you pay any utilities? What type of vacancy have you had?

My analysis would say you have $25/month in positive cash flow. Thats (rent/2) - P&I.

The more traditional seller analysis would say cash flow is $345 a month. That's rent - PITI.

QQ - if the tenants are great, and it's in a great area. Why are you trying to sell it?

I am trying to flip to get the cash out of the equity in the home.

The tenants pay utilities, and everyother service, this is my only SFH so i dont intend to use a property managment company.

So, how do I find good buyers for this type of sell? I dont want to sell to somone wanting to live there because I want the tenants to stay! they really are great!

We havent had one vacancy in 7 years!

The best price for a SFR is almost always generated via the MLS. You can sell with the tenants in place, though that might reduce your pool of potential buyers. An investor is almost always going to pay less than an OO, but if its a rental area you can still get a good price with a tenant.

Thanks for the help! I hope it sells! I am listing it on the MLS this week, what would you offer?

No idea. Prices are based on local comps and I know nothing about your market. Get CMOs from three agents in your area. Price it right and it should sell quickly. Don't do the "price high and hope for a sucker" strategy. That usually results in the place lingering on the market for a while and you ultimately getting a lower price. $98K for $950 in rent wouldn't fit my criteria for a rental. But many investors will pay a higher price than me.

IMO, if you want to get top dollar, you may have to be willing to vacate the property. I get calls from sellers every week that want to sell with tenants in place because they can't/won't evict good paying tenants. You really have to know your comps and your market. Are investors buying in your area with rents at 1%? That house may only sell for $95K to an owner occupant. What do the recent comps tell you about investor buyers versus OO buyers?

Well, if I sold the property right now it would Cash-flow $350 or more. Its already a good deal, so I dont know why I would come off the price for an investor or a OO. what would an investor typically want out of something that will cahsflow that much from the original asking price?

List it and see what happens. If you only get offers from owner occupant buyers you will know that investors aren't interested. If you get a full price offer from an OO, are you willing to terminate the tenancy?

Originally posted by @Daniel Shults :
Well, if I sold the property right now it would Cash-flow $350 or more. Its already a good deal, so I dont know why I would come off the price for an investor or a OO. what would an investor typically want out of something that will cahsflow that much from the original asking price?

In my analysis it won't CF $350/mo. I wouldn't evaluate the deal based on the best possible numbers, I'd be looking at the worst which includes PM, vacancy, repairs and capital expenses. Those things all come out of your $350 making it lower.

The other issue is the downpayment. Investor loans against rental property require real down payments. Putting $20-25K down for a what is essentially no cash flow might not get many takers. That being said, maybe you should advertise in California, because people here will go for that if there is management in place. You might even find an all cash buyer.

But again, what if you get only offers from owner occupants? Are you willing to get rid of the tenants?

For $98K with 20% down I get a cash flow of $54 a month for a cash on cash return of 3.3%. Even with an optimistic estimate assuming self management and working for free I get $187 a month and 11% cash on cash.

Prices are based on comps, though, not cash flow or rents. If comps have good support for $90-98K, put it on the market at about that price and you should get offers. If comps only support a lower number, the rent won't somehow mean investors might pay more. They won't. They will want to pay less than a retail buyer.

All the answers on here have been great, and very helpful!

@Mariepoe I would be willing to vacate the renters if I have to, but would rather not. Do you know of any investors that would pay cash for this deal? I can find managment for them?