Rental property from family

[Darren Nardo]

Hello! This may sound confusing, I’ll word it as best as I can. I would like advice, also the advice on if this is a good decision or not.

My grandparents are selling their last rental property. It is the house I grew up in, it has been empty for a while. They have been slowly fixing it up to get it to the point that they can sell their last asset for a nice piece of change. They are both retired so this is really it. My grandfather is tired of putting money in and they are getting very close to selling it.

The house is in an absolute great area to own a home. A great school district etc. I would like to buy it because I know no matter what I will always be able to find a tenant if the current tenant doesn’t want to stay forever. My problem

Is, is that I do not want to get it for cheap as my grandparents could use the money. But, at the same time I want to know if it would be a good idea to buy for a rental. For a while I've always wanted to buy beaters, fix up, rent. (BRRRR). So basically I'm wondering if this would be a good idea as it is already in good shape if it would be worth it.

Also, I’ve been working hard to save money in my account so that I can have enough to cover 15-20% costs if I were to do flips with a lender. So this question is, if I use the money in my account as a down payment for this great rental, what should I do to be able to move forward and invest in real estate without having to wait a while?

1. Is this a good idea to buy a rental property at a high cost, knowing it would always rent?

2. If I spend the money in my account to obtain this rental property, what would my next steps be to take so that I can get into more deals at a more rapid speed?

The house is $230k. I would already have a tenant who will pay $1700-1800.

With about $15-20k of work I know the house could get up to $285-305k.

My parents own our residential property on the same street and it just appraised for $310k.

So I guess there is some room to build equity.

THANK YOU ALL!

[Jacob Sampson]

1. No.  It doesn't matter that it will always rent.  It only matters that it will cash flow.  Every single one of my properties will stay rented forever if I lower rent to $50/month. but who cares because I am losing money every month.

2.  Don't worry about more deals.  First figure out how to make your first deal work.  This may break you and then you don't need to worry about future deals.

3.  I would be uncomfortable with mixing business with family.  As you stated you are going to be unwilling to drive as hard a bargain as you otherwise would.  That is a bad way to go into a deal.

4.  You might discuss with your family the idea of you finishing off the property with your own money and then putting it on the market to sell and split the proceeds.

5.  You are thinking this is a good deal based on purchase price to appraised value.  That is what you look at when you want to flip.  If this is buy and hold you want to look at how much it will cash flow.  Which this won't so not a great buy and hold deal.

I vote flip.