Rural Boarding House deal analysis

[MacKenzie Aldrich]

Hello all!

Like many of you, my eyes have been opened to the great potential of real estate and I’ve been searching and analyzing deals for a few months but haven’t purchased a property yet. 

I’m interested a a rural boarding house and according to my numbers the deal seems good. My hesitation on making an offer on the property is that it is in a small town (pop. 440) and provides housing primarily for the renewable wind energy workers that work nearby. It seems like a very niche clientele to rent to and that is my hesitation. Also hesitant because it could be too niche if I wanted to sale in future to upscale. I’m wondering if anyone else has experience with small rural areas they’d like to share. 

The numbers. 

Asking price $375,000

Gross rent monthly $5,500 (7 units, 1 mobile home, 2 RV pads) 

I’ve accounted for 10% vacancy, 8% management, 10% CapX ect..

I'm looking at cash flow of $1,363/month, 8.7% Cap rate and 15.6% CoC.

Thank you for reading and I look forward to your thoughts!