Offering 6-Year Finance Term, $15K down, no credit checks, no interest

[Annette Hibbler]

Selling cash flowing, complete turn-key SF rentals in suburbs of Detroit, MI. Now is the time to take advantage of great return on investments. These are all fully managed with one or two year leases in place. Don't think banks or hard money lenders can touch this. I'd like your thoughts on this deal.

15K DOWN - 6 YEAR TERM

House cost 33k each
15k down 18k financed over 6 years at $250 a month
Each house returns $750 a month rent
Monthly cost to finance $250

Monthly Gross Rent: $750
Less monthly finance payment $250 
Less Expenses $270
Your total monthly income of $230 rent paid to you.

FOR 5 SF RENTALS your numbers are:

Monthly Gross Rent: $3,750
Less Monthly Finance payment $1,250
Less Monthly Expenses $1,150
Your Total Monthly Income of $1,350

The property management fee charged for one individual single family home is typically $100 per month. Since you would be purchasing a block of five, you would receive a discounted management fee of 8% each thus the discrepancy found in your monthly net income for five versus individual purchases.

[David Beard]

OK, you "50% rule" purists need to give Annette a break! Many (most?) turnkey companies only quote the "fixed" expenses (T,I,PM), so she's in the mainstream. She's actually pretty brave to post property here in the land of 2%/50%, so I applaud her.

As long as you have the gross rents (if not actual, then supported by good rent comps), complete information on all physical components of the house, and the grade/analysis of the neighborhood, then you can easily run your own numbers.

The interest-free financing is a nice wrinkle, though it should be noted that the IRS requires the loan to be "recomputed" for tax purposes as if there was a minimum interest rate applied (varies in the 1-2% range, so it's low). So an $18K loan might be looked at by the IRS like a $17K loan that pays 2% interest, not a big deal for taxes but a nice deal that the seller is offering since these price ranges of properties are almost impossible to finance otherwise.