Is a house on corner with no backyard a bad idea?

Question

Across the street from me, a single family home sits on a corner lot(on a semi main road, across the street from a middle school) and has virtually no backyard(you can fit a BBQ and about 4 chairs). Is that automatically a bad idea? Do renters always want their own backyard? (I'm hoping to buy my first unit this year)

The owner recently passed away after moving in 2 years ago. It is 3 bedrooms, 1 bath and in seemingly good condition. I haven't run the numbers, it's not on the market. The owners son said they will probably try to sell it in a few months, so I was considering asking about a seller-financing deal.

Any thoughts on the idea? If the numbers and deal works out, will it attract tenants if it's in a good neighborhood?

Thanks,

Justin

Bill Gulley · Answer

Word alert;

Look at your comps, the yard size of the comps and the excess land value of the comps to compare the subject property. Subject might have 5,500 sq ft, your comps may have 8,000 sq ft, so youneed to adjust comps down.

Land value  begins with the sq ft required for that type of property, often 5,000 sq ft. lot costs generally fall at about 15 to 20% of the sale price for mature neighborhoods (say under $100,000), that cost divided by the sq ft is cost per foot and you  can  adjust value from there. You need to understand your market and adjust that % for more desirable or undesirable areas.

Your "target  market" of tenants can tell you about expectations they may have at a given rent level, retired or elderly, single busy or lazy folks, or a younger couple with 2 kids,  think about it, who will you be renting to and what do they expect as well  as how many are there of these possible tenants.

Good luck :)

Justin Jaeger · Answer

Thanks for the input guys, definitely plenty to consider. I'm sure ill have more questions as I'm hoping to get into the game with my first property this year.

David Dachtera · Answer

@Justin Jaeger,

Speaking as a single, former professional person with no children, a property like that might be good for someone who works days and doesn't care about the school across the street, but doesn't have the family / pet issues the other posters have mentioned. There are a fair few folks like that in the work force (because they haven't yet discovered REI!).

As Aaron pointed out, though, you may want to use a property management company to avoid any tenant issues that might arise if they know the "owner" is literally just across the street. Give that some thought ...

Aaron Lovett · Answer

@Justin Jaeger, welcome to BP!

If the neighborhood and the house are nice, and you are in a good rental market, then there will still be demand for that property even with a minimal back yard.  Everyone has a different set of priorities.  I wouldn't let that be the deciding factor.  Instead, start running numbers - calculating whether that would be a profitable rental to own.

The rental calculator can help with that: https://www.biggerpockets.com/buy-and-hold-calcula...

And there's the whole conversation about whether you want to be across the street from your rental property.  There's a lot to consider.  You'll find some relevant topics here:  https://www.biggerpockets.com/renewsblog/category/...

All the best to you, and keep us posted!

Linda S. · Answer

Not everyone wants to do yard work, so it's not a make it or break it thing for me.. but just realize you're likely not going to rent to a family, or anyone with a dog, so it cuts out a portion of renters.. but if the price is right you shouldn't have a problem renting it to a young professional.