Owner Financed Apartment in Louisville (feedback needed)

[David Lowe]

I'm looking to invest in a 2 bed, 2 bath apartment in Louisville, KY. It is turnkey and can convert from traditional rental to STR. Owner has proposed following deal:

- $240k purchase price 
- All furniture included 
- 20% down ($48k)
- 4.5% fixed interest rate 
- 2 year balloon payment 

Would you do this deal? 
What concerns would you have?
 

[Erik Hitzelberger]

From a LT rental perspective, this is nearly break-even BEFORE accounting for vacancy and maintenance.

As @Brian Stephens mentioned, you will want to be very sure your property would qualify as a ST rental before purchase. Check out the link he sent and pay particular attention to the distance requirements. Based on the purchase price and expected returns, I'm guessing you are in an area that has a high concentration of STR already. Talk to @Jay Leisten and other STR management companies about their fees. They are necessarily higher than standard PM fees.
Also, have them very the occupancy rate and income estimates. Don't forget to include the cost of utilities in your analysis.

IF the STR revenue number is accurate and IF the property qualifies as a STR, it looks like it will cashflow. That being said, I agree with Brian. I'd have a hard time making an investment that loses money in any scenario other than STR.

Good luck!