Would you buy an overpriced turnkey rental house?

[Ali Dawood]

I’m finally planning on making my first jump into real estate investing and I plan on starting with a fix and flip. I know this sub forum is for rental investors/landlords. The reason I’m posting here is because I want some insight from this group of investors.

I know this isn’t a new idea, and there are some big groups already doing this, but I’d like to purchase a home, rehab it, put a renter in it so it cash flows, then sell it all as a turnkey rental to an investor like you.

In the process, I would consider raising the price of the house compared to similar homes for sale in the area because 1. The house is rehabbed, 2. It has a renter in place, 3. The house cash flows

Now, as the title of this post states - Would you buy a turnkey rental house like this that has a renter and cash flows, but is 15-25% higher in price than other houses in the area?

Please comment on why you would or would not.

[Nathan Gesner]

Originally posted by @Ali Dawood:

In the process, I would consider raising the price of the house compared to similar homes for sale in the area because 1. The house is rehabbed, 2. It has a renter in place, 3. The house cash flows

No. The market dictates the value of a home. As an investor, I'll compare your home to similar homes on the market and determine the value myself. I'm not going to pay your price just because you tell me it's renovated or because you've put a tenant in it. I prefer to place my own tenants because I know my screening process whereas I don't know yours.

I suppose there are some investors that will pay you extra because they'll believe what you tell them. That's how investors tend to dig themselves into a hole.