Lousy short term cash vs awesome long term gain

[Andrea Chester]

My husband and I are looking at an investment property that comes with a tenant locked into a lease until March 2019. After crunching the number we would only cash flow $100/mo and has a poor cash on cash return but we plan to rehab the house when the lease has ended. Homes in this area are appreciating fast. A 200k rehabbed home is selling for 360k. The analysis looks bad but I can’t look past the long term equity. Advice?

[Vinay H.]

$100 cash flow while you get it ready to rehab does not sound too bad. This will give you plenty of time to get your contractor ducks in a row. As opposed to people who buy a rehab and have to rush since every minute is costing them money....

If course, this exposes to long term risk since nobody knows what happens in March 2019 (may prices could level off or come down) but at least you have your foot in the door.