Seller Will PG 1 Year's Rent...

[Jake Kucheck]

So... here's a deal I haven't come across before.

Rent: $1500/mo, tenant in 3-year lease, seller will PG 1 year of rent at that rate (market rent is closer to $1200-1250/mo).

Sales Price: $165-170K
HOA: $210/mo
Tax Rate: 1.13%

Is a PG on the rent something that should entice me? Or something that should scare me? I've never had anyone offer to do that before so I really don't know what to make of it...

[Jon Holdman]

$165K is way too much to pay for $1500 rent, and especially more than $1200 in rent you get once this tenant moves on.

This seems to be pretty common on the "turnkey rentals" sort of deals. You get a guarantee of a years rent. After its over, you're stuck with an overpriced property that doesn't bring in enough rent to cash flow and can't be sold at a high enough price to get your money back.