Is This A Deal Or A Problem Waiting To Happen?
Here's the deal:
This is a 4 bedroom house, with each room rented out individually. The common areas are shared. It is currently fully rented, and has been for quite some time. The house is in an industrial area, and the tenants are workers at the nearby industries. The rents add up to $1600/month. The house is for sale for 100k. There are some other expenses (for example, the current owner pays most of the utilities) which I am waiting to get answers on, but the cash flow prospects seem good.
Now here is the twist. This house is located about 4 hours from where I live. Am I asking for a management nightmare? The area has a lot of rentals, so it seems like I could get a management company to take care of it for me, and still end up with good cash flow.
Any thoughts? Do I need to get more specific numbers and post again? Anyone have experience with this type of rental?
Thanks,
-John
Boarding houses need a strong armed biker, not a management company. And the strong armed biker needs someone looking over his shoulder. You might get lucky by putting together a procedure and using one of the guys living in the house to collect the money. Boarding houses do need a lot of hands on management.
But you can try getting a management company. But boarding houses require more and different management than single family houses.
Today, how is the rent paid and collected at this boarding house? Are towels, toilet paper provided. Is there a washer and dryer on premises? What is the water bill, electric, etc and who pays?
Brenda
It sounds to me like this could be a pretty sweet deal...a decent positive cash flow....fully rented.....On our rentals, we pay a guy 5% of the collected rent, and he does all the maintenace on the properties and collects the money for us. The cash flow seems to be there, and obviously best of all, you own a property that is paying for itself, which is why this biz is so great
[addsig]
By the way, 5% is extremely low, we just got really lucky finding this guy...
Yes it is a deal but also a potential problem. Do the risks outweight the sweet cash flow? How stable are the tenants? If the house gets "trashed" do you care? How high are the expenses? Would hate to see a $300 utility bill cut into your profit...
Q
This is true, many tenants, different lifestyles, you're 4 hours away could be an inconvenience. What is your G.O.I. as opposed to your N.O.I.? These are things you should concern yourself with. $1600 per month is nothing if your expenses exceed that!
Thanks for all the replies! All the little complications on this deal subtract greatly from my comfort level. Also, a good chunk of my capital is tied up with another deal right now. With that in mind, I think I will pass on this one. If anyone wants contact info for the seller, let me know. The house is near Savannah, GA.
-John