What should I do

[Kyle Biggs]

I'm a investor with 2 rental properties that cash flow $1000 a month. I recently started a refi on one to get cash on another deal. My grandmother wants to sell her home but live there rent free for the rest of her life. Could be one year could be 10. I could purchase it for $60000 and it appraises at $110000 as is. But most homes around her are near $200k rehabbed. Should I buy it and take  500-600 less profit per month knowing I can sell it for a large profit as is or even more if completely remodeled? Or should I pass on it and take the refi cash into another deal? 

[Locke Tucker]

With all of that in mind, I think it would really be dependent on where you see that specific market going. We all know houses historically go up in value over the long term. If property values appreciate well, you might be sitting on a property that's worth a great deal more than todays ARV, especially if you can complete some of the repairs while your grandmother still lives there. If properties in that area tend to appreciate more slowly, especially if you can't start renovations immediately, you may sit on that investment watching potential profits get eaten away at slowly as inflation passes appreciation.

Personally, if your market tends toward the former condition (better/normal appreciation) I think it's a fairly safe deal looking at the long term, assuming infrastructure around you continues to support the idea of renting it. If appreciation is not there, however, it seems like a potentially long waiting game to see if your $60k investment today returns anything meaningful in the long run.

Sorry this isn't really an "answer", but it's something more to think about.