St Louis SFH, turnkey investment

[Stacey So]

We are under contract to purchase a SFH in St Louis as rental property from a turnkey provider (Memphis Invest/REI Nation) for $125k. After a low appraisal ($70k, later went up to $90k upon contest), we changed lender and appraisal came back at $108k. Our ROI went from over 10% to around 8%. My questions- 1) how is the St. Louis market doing? We are afraid to go in this much under water and don't know if it's realistic to expect appreciation this quickly to cover the negative equity. 2) Would you walk away? We are out about $2k at this point with 2 appraisals, inspection, termite report, survey etc. Don't even know if we'd be able to walk away without losing the earnest money.

[Kyle Eckert]

@Stacey So

Saint Louis is historically a low-appreciation market, so I wouldn't bank on that covering any overpayment.  My guess is the turnkey provider missed their mark for the value of the home, and it's on them to bite the bullet and lower the price unless there is a line of offers out the door (might be in the market).

It's fairly easy for an out of state turnkey provider to miss the price mark, since our neighborhoods do weird things for appraisals. I assume the appraisers are local and are factoring that in.  As a realtor, I wouldn't ever advise an investor to pay over appraised value.

Get a good STL realtor to work with you, this city is wild for property values if you arent from around here.

Cheers.