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I have this under contract for 146K. I'll do owner-occupy but I will actually live in my RV on the property, and will also travel some. I'm guessing I will have PMI. (BP calculator doesn't seem to add this or let you add it)
It's SW of Tucson, about 19-25 min away from the amenities commonly used... Walmart, Tractor Supply, Lowes. Three feed stores are within maybe 15.
So it cash flows of I can rent it at $1,700. The house needs a LOT of work. The whole place does. Lots of deferred maintenance. Needs new roofs (2) and new carport roof. Slated to cost 5,500 for house/carport and 12,000 for the barn.
I thought this would be a good property as it is on a great street, pretty much no neighbors, at the end of the street so nice and quiet. I would live on property part time in my RV as would my business partner. Was going to fence off an area and give us our own gate. (More $$ I haven't accounted for in the calculator)
At first I thought I could get 2K/month for this huge 11-stall barn and house on almost 5 acres. I got laughed at a little on FB when I posted it for rent. Yikes. The house is definitely small. 1br 1ba, 1080 SF. Rents in the area seem to go for 1100 to 1400, but for more sf, but WITHOUT horse amenities. Why not ask for more if a person can keep your horses in their backyard?
It's a rural area so comps are challenging, but there has been a LOT of interest in people BUYING the property.
So, it would give me a little cash flow, it would give me something to do (projects), it would give us a place to 'land' for a while during Covid, and was thinking it would help me and my business partner start putting together a team. We are considering investing in and around Tucson so it would be nice to stay in the area a while.
But I want MORE ROI. Maybe I am being greedy? I am so 50-50 on this one I thought I would share.
Truth is I will likely spend more than I listed on the rehab. It needs more paddock fencing, stall accessories, maybe a round pen. I love spending on that kind of stuff. I want to paint the giant barn. That's $$$.
I want it. But I also want more cash flow.
Is this a good deal? I know, I know. It depends on what I want/my situation/my ROI personal base, etc.
Maybe I am missing something?
I am cheap. LOL!!! Grrrr. This is hard. 😂 The good things are the hardest?
This is not my first RE purchase, but it IS my first that will be purchased for investment. BUT at same time, I am house-hacking it for now. Still, investment property, yes.
Tomorrow is the end of my 10-day 'grace' period to back out or tell them what I want them to do. There is a cash buyer behind me waiting if this falls through for me. So they aren't going to come down on price much dangit. I was going to go WAY down, to about 100K with all the repairs it needs. Well, that ain't gonna work anymore. 😂 😭
Sounds like you'r letting emotions get in the way of the number$. The numberS should win all the time. Leave your emotions in the horse barn.
It also seems as though your reasons for buying the property are based on number$ that have no basis for being fact. Every number you mention positively, is based on some sort if "wish" statement. There's a reason why your FB mention was laughed at.
If the rent scenario is carrying a lot of negatives, but there's a lot if interest in buying it, then this isn't a rental property...it's a flip...maybe. Just because people want to buy it, doesn't mean there are people that want to rent it.
After reading this, to me, it appears as though everything is telling me this isn't a good deal. It is also telling me you know it, and what you're hoping for is for others here to tell you something you know in your heart isn't true. That's your emotions talking. Don't listen...your emotions are never right unless the number$ agree with them.
@Kelly Beasley rehabs are very complicated and a lot can go wrong. The larger the Rehab the larger the risk. Probably not a great first investment.
Can't tell from your post if you and your partner intend to stay there for a few weeks, a few months, a year? Longer? If your purpose is using the property as a home base first, that's one consideration. I know this is investment-oriented website but when it comes to personal living arrangements it's OK to go with your heart even when it may not necessarily make financial sense. Now, if you really are looking at the property as pure investment, you need to get a better handle on the ARV, I think, as the improvements are going to be costly and you do not indicate what you understand the place will fetch after it has been improved. It sounds to me like this is a better flip (even if over an extended holding period) than a rental.
I agree with what was said above. It sounds like you want this deal and you're looking for reasons to justify it when the numbers speak volumes for you. Secondly, a horse barn and paddocks require daily maintenance, and if your tenant is not taking care of it properly, you're going to have significant repair costs when they turnover. That aspect seems like it needs to be run more like a business than a rental investment.
Just remember that a bad deal can set you back. Be patient and wait until you've found the right deal.
Thank you very much for the replies. Good things to chew on. I have a termite inspection on the eaves of the barn and an electrician is coming through to give a quote on how much correcting the electrical mistakes will be. I am almost hoping I get bad news so it’s an easy decision. I think I mostly wanted it because the barn. It’s a concrete block barn which Isn’t going anywhere and needs little maintenance except for the roof, which must be replaced. Still, it’s not the most pretty barn you’ve ever seen. LOL! I think I have my answer. This was helpful. Thank you!
@Kelly Beasley the barn and horse potential have no value to tenants....no one who owns horses rents small singles and the little house is of no value to horse owners. You would be better off marketing them separately but I don’t think you are looking at premium rents here
Thank you for your valuable input @Jonathan R McLaughlin . I think you're right. So, I have changed my tune with this place. I realize it is more valuable for two purposes: 1. To fix and flip for a mild profit. 2. Just keep it as a place to stay (park in our RVs) for myself and my business partner. (There has been a lot of interest from people to PURCHASE this place)
We have been full-time RVing for 5 and 6 years living on public land. Winter is getting boring/old as one is forced to come down to Az to live. It's getting boring going to the same spots. This will give me a project to work on, a place we can hunker down during this initial Covid period, and I think I will do ok renting it out and/or then just selling it.
If I break even or even lose some, that's fine. I don't want to live in a campground, that's for sure!!!!
So it looks like I am going to move forward with this. Asking them to do a lot of the repair work though. If they don't, then we renegotiate price.
I just want a place to stop and stay at the moment. : )
What do the numbers say. Feelings have no business here. Also, for most things in life the absolute bottom of the barrel of society is found on Craigslist with facebook closing in rapidly on that crown. While all information is valuable, you’d be better off to post this wherever you actually will get tenants as opposed to that gong show of a community. Roughly the same value would be asking your child’s grade 4 class about this as an investment property.
@Kris H. GONG SHOW!!!!!!!! LOLOLOL!!! Thank you for that great laugh!!!!! I’ll be calling it that forever now. And root are 100% right. 😁👏🏻
Updated 6 months ago
You are, not 'root'.
@Kelly Beasley It seems like you already made up your mind and you just need justification of your decision.
From an investment standpoint, the numbers are telling me it's not a deal for me. For the rehab, do the work only if it will give you something in return (increase the value or rent), otherwise, don't do it even if you feel like you will "love" it done. Another alternative is to use it as short-term rental, if it's feasible, since you will be leaving on it or next to it anyway.
From the buyer standpoint, since you have a cash buyer right behind you, be ready for the seller to come back rejecting your request. But anyway, good luck and let us know how it ended up.
I changed my mind. I think you need to buy this property after all. Why? This will be a great learning experience on how to completely ignore the numbers, and go with your gut feelings (emotions). When the smoke clears, and you are now rationalizing why your previous rationalizations for buying the property in the first place were...correct all along...the problem was the property just didn't want to cooperate with you.
Keep this property as a template for future buys. The more times you lose money on a property, the more learning experiences you will gain. Now they will be expensive ones, but there's nothing like making the same mistake over and over to reinforce the rationalization that emotions will always help you make better decisions than logic and math...when it comes to real estate investing that is.
There is a cheaper way to learn though.
Can you make a separate entrance for the barn and rent it separately from the house? That way you have two tenants and not dependent solely on one tenant to pay for everything. You can get top dollar for both.
As for the house, is there any way to add another bathroom and bedroom? Or just one bedroom and a half bath. This way you can ask more without getting laughed off the internet.
Overall it sounds like you did not make a plan for your exit strategies. When you have a plan or plans, then it's easy to make decisions because you are only left with the numbers.
Making plans with numbers for all your exit strategies, then the decision is quite simple. Yes or no.
Hope this perspective helps.
I WILL fix it up some- it's in my nature and I need/want a project to do. I ALSO want/need a place my RV friends can come stay/visit. Need to have room for them and for it to be legal for them to do so. (It is where this is located) Having a 'landing pad' after being on the road for 5 years feels good right now.
And yes, Iconsidered adding a bedroom at the very least. The square footage can easily accommodate. AND I considered separating the barn as well. However, It is pretty far outside of town for anyone to want to board there, I think. If I find a renter with a horse or two, I know the rent will easily cover my expenses and make a little profit.
I decided on getting an owner-occupy loan in order to have less skin in the game. It's more per month, but again, I am only paying half of everything. I wanted to keep more for a future DP on an investment property.
It's a win-win for me. Serves more than one purpose. Now, my NEXT purchase will be strictly for investment purposes. I aim to get 12%+ ROI on anything else I buy.
This place? It's for me. AND my biz partner will be paying half of the bills so it's pretty much a house-hack right from the start. 😀
I dont know where your getting your rent numbers. But a 1/1 in rural SW Tucson is never going to get 1100-1400
@Michael Leung 😳 even with an 11 stall horse barn on 5 acres with paddocks?
@Kelly Beasley is this property near the Sells, AZ area? If so, get the money you can from a flip... a 1/1 wouldn’t for for over $1K (even with stables). BUT if there is a way to turn it into a duplex, that could be a way to get closer to your numbers.
Also, I saw you post in one of your post about permits... I called this number and asked them “general questions” about permitting like: If the dwellings on the parcel match the description with the county but a permit can not be found, how would that de rectified? They were really receptive to answering those kind of questions. Here’s the number, hope it helps 5207246490
Hi @Ryan G. ,
Thank you for that tidbit. I did call them yesterday. Neither the house nor the barn were ever permitted. The barn sounds like it's way too large. Should be no more than X or Y and it way goes over both. It's over 4K sf. It's also placed too close to the property line.
(But what is done is done- what would be the ramifications of these issues? I asked the county guy and he said if I want to add onto the house or do some work 'requiring' a permit and filed for one, they would inspect, and I'd probably have to correct whatever wasn't up to snuff in their eyes. But if the house isn't permitted, I would simply not get a permit to do any work to it. At that point, why bother?)
I can only build a guest house. Can't make it a duplex. And guest house has to be something like only 75% of the footprint of the existing house.
THEN I found out I can have an RV on the lot and live in it (have to get a permit), but am only allowed to store another one and it is supposed to be out of sight of neighbors. Dangit! This doesn't work for my business partner and I to both live in our RVs on the property.
It's near the Three Points area. I'm not sure I can get more than I would be buying it for by doing the renovations. I don't think I want to risk it. Would be nice to have a place to hunker down for a while in our RVs but it seems we can't even do that. (I love my RV, would rather live in it than in the house.)
I hear people just kind of do what they want out there. Unless someone complains, the county is hands-off. That's what they county guy told me over the phone.
I'm leaning more and more towards exiting this deal. I made my contingencies, they countered and now it's my turn to reply or back out.
The crazy thing is that the property right behind this one has about 5 fifth wheel RVs on it. They rent them out I hear. So, they are not in accordance with the county rules. I'm pretty sure they wouldn't complain. But the risk... it's darn near too great. I COULD live in the house and store my RV at the property behind the barn. But once I rented the place out, sounds too 'risky' to try to have the both of us living in our RVs on the property. There's no privacy from the road. Anyone who drove down it could see the RVs unless I park them behind the barn, which is less than ideal. The RV hookup is in the middle of the property.
The country is not friendly to full-time RVers, unfortunately. 😞 I mean, I understand why the rules exist. But for the non-trash type, it sucks to be prohibited from doing something as simple as living in an RV on property you own.