FL Beach Townhome. Offmarket. Owner Finance. Great Rental Income. What you think?

4 Replies

I have been lucky enough to come across an unlisted townhome 265' from the beach in  Florida. I have be able to negotiate some good terms. What do you think of this property? How would approach it? (I am having trouble coming up with the 30K)

Details.

1bdr 672 sq ft - not a high rise but you actually have your own driveway)

Sell price of $75000

Down Payment of $30000

Owners will carry $55000 @ 5% for 15 years - (434.93 per month)

Rents to snow birds for $650 per month for 8 months out of the year. During peak summer season its rents for $700-$750 per week. All rents have been documented and verified, with current winter tenant in now and signed on for next winter. No planned assessments within the next 3 years. Gated community with the amenities.

Potential Income - $18,500

Less 20% Vacancy - $3,710  (73 days per year)

Effective Rental Income - $14, 840

Less 12% Taxes - $430

HOA Fees- $1,560

Maid/Turnarounds - $1,580

Insurance - $1,400

Maintenance - $800

Operating Expenses - $5770

NOI - $ 9,070

Debt Service - $4270

Cash Flow before taxes - $4,800

Cap Rate of 30%

Cash Flow 16%

Is this something you would buy and hold or try to wholesale? (Since im having trouble with the 30K)

Thanks

J

Updated over 3 years ago

fat finger. It would be $45k they would carry. Comps are fair. I know an investor who owns 3 other condos in that unit. Those maid/turnaround services cost are legit and he rents his out VBRO. I realize you say they don't but this unit already has one

One of your basic numbers is off.  $30k plus $55k is $85k.

I doubt the rental numbers, without a Ton of self management, and leasing fees. Snowbirds don't generally rent the 8 "off season" months. This doesn't really seem like a great deal, certainly not a wholesale, without knowing the comp.s, what are they? They should be easy if there are many of these units.

If you want to PM me the address, I can probably find comp.s, if you can't find them on trulia/zillow.

Why is it unlisted? Do the owners just want to give you a discount?

I have looked at other deals like this. Often, management owns some units and they manage others. They give rental preference to their own units.

I suggest looking at sale history of this and other units. Is this a good deal? Or are you paying retail? What has happened to valuation over past years? Do you think you are buying at discount? Do you think values ill increase or decrease?

As units age, will HOA dues increase?

I just don't like giving away total control. Might as well own a mutual fund.

It unlisted because I was able to get to them before they listed it. Its a FAIR price, yes a lot of the owners and board members are investors but its not like I have to get their permission to rent, I can source my own renters using VBRO..etc. It is 100K cheaper than 2008 levels, this exact unit, there is tremendous upside, but its the monthly cash flow I am wanting. In my analysis I have factored in a 40% increase in HOA dues and I am still banking a lot of cash flow. I could buy it cheaper I guess if I just paid cash out right. What control am I giving up here? What mutual fund will give you 16% annual dividend and still appreciate?

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