The Cash Flow house dilemma

[Joseph Walsh]

Hi all,

Question for you all.  We are looking at student rentals.  We found a few that are "great" options.  We have found a few houses that are well priced, and will rent probably at the mythical 2%, maybe more if I were to do some reconfiguring in future years.  Rents are increasing, and due to demand, vacancy, while account for, may never actually happen.  Houses are cheap, 60-80k.  Problem is, there is no growth in this market, these houses will be worth 60-80k.  maybe a few % 5+ years down the road.  What's the best way to purchase these.  I likely can't get the house low enough + improvements to hit 25% equity for a "traditional" private/hml investor, improve, cash-our refi.  How would you approach an investor for say, only the DP and improvement costs, and the return is on the rents for say, 3-5 years, instead of in year 1.

There is a silver lining.  Worse case scenario I could just do a traditional finance and pony up the DP at those prices, but it ties up that cash for 4 years.  It might still be worth it.

Thoughts?

Thanks, 

Jay