What makes a leased occupied SFH a good investment property?

[Marvin S.]

Hi all. 

I am currently in discussion with a seller of a SFR that is currently and has been rented for close to 2 years @$1,100 in the Birmingham AL market. The current rent and asking price gives a gross rent yield cap rate of 16.5%, before expenses, so ideally with an all cash buy, the net after operating expenses should be a solid double digit %.

I am ready to make an offer that with the current rent would give a gross rent yield cap rate of 20.5% to wholesale to an end cash buyer.

I reached out to the seller 2 years ago before the property was leased and for all intents and purposes the cash asking price is still the same.

Would these numbers be attractive to a buy n hold or turnkey investor?

If so why?

If not why?

[Brent Coombs]

@Marvin S., if we say go for it, but then after acceptance, buyers say no, how will you proceed?

You should really only be putting in Offers for the price that YOU will close on, regardless!

So your question should be: do I want to buy it at a 20.5% gross yield, if I can't find a buyer?

On the face of it though, offering $65k for a property that SHOULD sell for $80k+ looks ok.

You DO realize that its expenses may/will take it below double digit returns for your buyer, right?...