All Forum Posts by: Anna Runkle

Thanks again everyone, we withdrew our offer and our guts said "phew." I really appreciate the generosity of those of you who shared your experience. It's like having a board of directors to help us steer this little ship!

Thanks SO much everyone -- it's really valuable to get this input, right when we need it! It sounds like most people are tilting "no" on this property, and we are taking heed. Before we withdraw our offer, I wanted to answer a few questions that people posed and see if this changes anyone's advice: 

In a scenario with 20% down, or with cash out after cash purchase, the property is still strongly cash positive. That's why we're interested, despite rural location and 

I have a friend in the town in the hospitality industry; she's the one who alerted us to opportunity and told us there's a high demand for rentals this year. Property prices went up 26% since last year because of this increased demand -- I'm still not 100% sure this is the reason but locals say it's because folks in nearest major city where prices have gone way up are a) moving to cheaper areas and b) investing in cheaper areas. It's a popular outdoor recreation area.  

Friend connected us with her friend who is (with other family members) is both realtor and property manager. All our calculations are based on the real fees for property management, which are on the high end. Realtor/property manager says there would be no problem finding quality tenants, as there is now shortage of rental housing (apparent glut of single family homes though). We have requested better info about why this is and expect that info today.

Hi, we'd like your experienced opinion! My husband and I are interested in buying rental properties to augment our retirement income (10 years from retirement). We're new to this, but have been reading and visiting open houses for several months. We live in CA, so cash positive opportunities are generally far from home.  After pursuing several good buys in the last couple of months -- and losing them to more aggressive bidders, we decided to offer cash (at lower-than-asking price) for a multi-unit rental property in a small town, three hours from big cities, in another state. We have contacts there who alerted us to the opportunity. We received our counter offer, and we're in the ballpark, but now REALLY wish we had an experienced investor to check our assumptions. 

Positives: 

• Great cash flow -- full occupancy at current rents, with local property management, will net us more than 10-15% of home value annually. 
• While home prices are low, rentals are in demand, and our local contacts (hotel owner and realtor) tell us there is high unmet demand for rentals, and tell us there would be no problem finding good tenants. Could also use Airbnb to rent furnished units to traveling nurses.
• Property is in good neighborhood of quaint town. Inspection is pending, but property appears to be in good condition, considering age.

Negatives: 

• Town is quaint but low income -- rural, out of the way, no major industries, with published vacancy rate of 20%. Looking at recent activity, there are a lot of properties for sale, almost none for rent, and a lot sales happened in 2017. Prices have gone up 25% in past year. 
• It is far away from us -- a 2.5 hour plane ride then three hour drive. 
• Structure is 80-100 years old (I told you, this place is quaint). 
• Units vary from nice to funky, but all in working order. 
• Cash offer got us to the front of the line, but would consume 75% of the money we have available for investment right now (still leaving enough for one mortgaged rental property).

Question. Would like your opinion on the wisdom of this purchase. Current counter offer by seller is about 6% less then asking.