What $60,000 buys in North County, St. Louis

[Gunnar Teltow]

After talking to a few potential lenders, it looks like they all require a $50,000 minimum property value for it to be eligible for financing. So we had to move upmarket (such as it is) in North County!

Instead of buying $30,000 houses that rent for $700, we're now buying $50-60k houses that rent for $1,000 or so. The tradeoff for the weaker cash flow is better quality tenants and some appreciation potential. Here's what $60,000 will buy you (closed on it last Friday):

• 9638 Chicago Heights Blvd, St. Louis, MO 63132
• 4/2
• 1,560 SF
• rented to a quality tenant with two cats for $995/mo., which is about $100 below market but she would like to stay and has been great with upkeep and timely rent payments
• $57,786.45 per HUD-1, plus some commissions to my local agent and the inspection
• even with all-equity, this is a great investment property. After financing, it will become a cash cow of epic proportions.

This deal came to us because a large private equity shop backed out of the contract so we stepped in. This is unit #31 in our portfolio. The point of this post is to encourage everyone who is thinking about it but hasn't pulled the trigger: get started, get out there, and the deals will start finding you :)

[Daniel B.]

@Gunnar Teltow However much you are estimating for Vacancy/credit loss, I would increase it. I own 3 in North County (all west of Lindbergh). I also have some relatives that have about a dozen more in the same area. The numbers in North County are great on paper and the real returns are still good, but just be sure to budget for higher costs when it comes to vacancy/credit loss and the amount of money you will spend in between tenants. If they are being evicted or leave before they are they all leave it trashed and it will need more than just new paint. I had a tenant that was making $50,000 plus a year, lost her job and then couldn't find anything that paid remotely close to it, she went from a great tenant to leaving the place trashed and moving out early. This seems to be a recurring theme in the area as other investors have had the same experience. Any time they lose a good job it's extremely hard to find another one that pays remotely close.

People seem to migrate west when they can and then make the jump out to St. Charles when they can afford it. There are always pockets of good and bad areas, general rule of thumb we stay west in Florissant. Good Luck!