Newbies and we don't want to take advantage of grandpa.

[Hilary Graves]

Newbies, looking for advice! 

Yesterday we spoke with my husband's grandparents and mentioned that we are looking to invest in rental properties (we are still learning, building our team, JUST got approved for a credit line, and so far have zero properties). Grandpa mentioned that he actually owns a few rentals in Palmyra, PA, which was news to us. We knew he owned lots of land, mostly for hunting, but didn't know there were rental properties on any of it. He said his rentals are actually just a headache for him, which is why they are currently for sale on the MLS as a "bundle", along with some adjoining land. It's listed at $920,000 (way above where we wanted to start), but he said he would drop the price by a few hundred thousand (!!!) for family.

About this property: It is divided into three lots.  

Lot #1: 13.5 acres of land (currently all trees), no buildings.  

Lot #2: Small SFH on 2 acres of land.

Lot #3: Small SFH on 1.3 acres of land.

Let's just say that we discover that the discounted price he is willing to give us is in fact a GREAT deal and we can afford it (we aren't sure if it's a great deal yet, and have contacted a realtor friend in the area to help...it's 45 away from our house).   What would we do with the land on Lot #1?   We don't have experience fixing up existing rental properties, let alone building new ones.  Would we be getting in over our heads?  Lot #1's land is kind of "behind" a bunch of other properties, not accessible from the road at present.  If we ask him to sell us only Lot #2 and #3, will it then be impossible for him to sell Lot #1 then (the land-locked land)?  We don't want to give HIM a raw deal while he's giving us a good deal...

Thanks for any help!  

[Nathan Gesner]

If he's willing to sell them below market, that means you'll start with immediate equity. I would seriously look into it, but you have to crunch the numbers to see if it will cash flow. Just because something is below market doesn't mean it's a good investment.

How are these properties zoned? Can you convert them into mobile home parks? Subdivide and sell some off? Partner with a developer? There are dozens of different ideas, but we don't have enough information to go on. It's time to study, study, study, and see what options are available.