Owner Financed Airbnb - Good or Bad strategy?

[Chandler L. Parker]

What's up BP!

Last Friday in my search for a willing landlord to start my Airbnb business I found a seller willing to owner finance the property. The list price was $284,000 for about three months then got dropped to $264,900 and they offered the owner finance option. $5k down and $1,500 a month. With me taking on the finance my self in not more than 4 years. Fixed rate of 5% interest. They are also leaving the home fully furnished. I asked them to because the home is set up perfect for an Airbnb as is. I could literally list the property the day after closing. I was planning on a $4k furnishing budget if they emptied the home. I offered to bring an extra $3k down to closing if they would leave the furniture and they said YES!

Comp. bnb units in the area are going anywhere from $150 - $300 a night. The house is 2 story, 3bd 2bth with a second lot attached that i could put a small guest cabin or bungalow on in the future. 

If I can get say $200 a night and I only have a 50% occupancy rate. That's $3k on a bad month minus payment and utilities. I  could potentially profit $600-$800 at 50% occupancy...and I own it so i'm building equity as well.

Also, the balloon payment(when I take on my own finance) is contingent upon the appraisal at that time. So $264,000 is the agreement now but if it appraises at $240k that's all I have to pay but if it appraises at $300k I still only pay whats remaining of the $264K

I see a win win where I could potentially have 20% equity in a few years at half occupancy. I have the property under contract but it's contingent on my satisfactory inspection.

I would also plan to continue paying to principal with my regular job to get to 20% equity ASAP!

Looking forward to your advice!

Thanks BP!