Investment Property to good to be true

5 Replies

I ran across an off market (MLS) Deal which is a good deal. The seller is willing to sell the house to 260k its 4/3, house built in 2006, hardware floors, granite counters, beautiful home, IN Grandview, Mo.

Comps show 290,00 so I have equity built in. This is a single family home.

My problem is there is no way to get 1% rent on this house. I could just flip it but I'd have to use an agent and then all those agent/broker fees would eat into some of the profit.

Rent comps are 1500-1600, mortgage is 1685, and taxes and insurance is 3000 a year

The only thing might work is Air BNB. It looks like there are some houses who do this get 200 nightly rate M-Thurs, and 250-300 for weekends depending on what's going on in the KC area.

Should I pass? Air BNB is new to me as a business model. I prefer to buy and hold, get tenants for cash flowing and build a portfolio.

Any suggestions is greatly appreciated.

@Karen Barber it doesn't sound too good to be true if you can't find a way to make it work... 

I usually like to encourage people to take risks and pursue new opportunities, but I think you're forcing a deal here. $260k is a great price for a new homeowner but not for an investor. 

If you can sell it FSBO and avoid 6% commission then maybe you make $15-20k on the sale?

Originally posted by @Karen Barber :

I ran across an off market (MLS) Deal which is a good deal. The seller is willing to sell the house to 260k its 4/3, house built in 2006, hardware floors, granite counters, beautiful home, IN Grandview, Mo. Comps show 290,00 so I have equity built in.

My problem is there is no way to get 1% rent on this house. I could just flip it but I'd have to use an agent and then all those agent/broker fees would eat into some of the profit.  Rent comps are 1500-1600, mortgage is 1685, and taxes and insurance is 3000 a year

Should I pass?  Any suggestions is greatly appreciated.

I am in a higher priced equity market (vs a cash-flow market like KC) and bought an off-market house similar to this in April.  I had a bit better of an equity capture going in and wrote a lease option on it.  

I bought it for $277 and did a 12--month lease option for $325 @ $1650/mo.  Give you an idea of the equity spread.

In general I need 12%+ equity capture so you're close. With a LO you get a tenant with skin in the game ($9k option consideration in my case)  and a commission-free sale with no vacancy. 

If this is in a solidly appreciating neighborhood, I'd tweak my PP a little down and 'sell' it with a lease with option to buy for $300, rough numbers.   

But... I'm a lease option guy more focused on naps and the balance sheet. An Airbnb person will advise you do that for cash flow.  

If I was newer and buying for long-term cf I'd lower my PP or pass. 

@Karen Barber if your goal is cash flow to build a portfolio, you will accomplish this much faster through Airbnb. If you need help walking through the numbers to see if it makes sense for your deal, feel free to DM me.

@Karen Barber Have you gone on AIR and VRBO and done your homework? If you're seeing other 'similars' around you getting good $$ for a STR, then why not? Having come from more traditional rentals to STR, I would never go back. Why wouldn't you want to make 3x for a little extra headache....?