SFH turnkey in Kansas City - deal or no deal?

[Julie McCoy]

Hey all, 

I've been in discussion with a reputable KCMO turnkey operator over a house they only closed on this week - love everything about the property, but just got the offer numbers and now I'm not so sure.  

Location: Raytown-adjacent, outside the 435 loop, 73% owner-occupied neighborhood, Raytown schools

Property specifics: built 1960, 3/2, 1200sqft, 2 car garage, large lot, quiet street

Planned renovations: New roof, HVAC, some new electric, finished basement, good cosmetic finishes (hardwood/tile, granite, etc)

NUMBERS:

Price: $99k (after renovations)

Projected rent: $1100/mo

Estimated monthly expenses: ~$400 (allowing for vacancy, maintenance, taxes, insurance, PM fees)

I'd use leverage to purchase, and with the payment factored in I project just under $300/mo cash flow and about 11% COC, Cap rate between 8-8.5% depending on how you crunch the numbers (I'm rounding them for the purposes of this post, but I calculate pretty conservatively).

The numbers are decent, and I like that this house is on the higher end of neighborhood normal - it should be a very desirable rental, and attractive to a potential future buyer (though I intend to hold).  My big concern: the price of $99k is well above the comps in the area (there aren't many, but similar properties are $70-85k). 

I welcome your input!

[Account Closed]

@Julie McCoy for me it's clearly a NO DEAL.  I think  the sweet spot for cash flow properties is $45k- $75k with rents $700-$900.  Listen to Ali Boones podcast on www.turnkey-reviews.com about higher end rentals.  They can be harder to rent at times.  It's not like California over there.  People can get a mortgage for cheaper than the rent.  If someone can afford $1100/month chances are they could or would buy a house limiting your rental population for that property. PM me if you would like to learn more.  I have been doing this for almost a year now and can share my mistakes and experiences for you to learn from.  Thier is more to know than people think sometimes.  It may seem simple at first but as you grow as an investor you start to learn how complex investing can really be. If you want to hear my story I did a podcast on turnkey-reviews.com and one on the Joe Fairless show at http://joefairless.com/blog/podcast/jf349-how-to-find-a-lender-to-suit-your-investing