House by a Cemetery

I’m considering buying a 5 bed/3 bath, 1 car, 1991 built house to rent and sell in 5 years. It’s listed for $199,000 and is below market. I will actually be negative cash flow since I don’t have any money down.

The house is built on a block of newer homes and surrounded by much older homes before the 1920’s. the one thing that’s holding me back is that it’s right next to a cemetery. I’m afraid that I mite not be able to find renters due to the location even though it is a great house and the same reason when it’s time to sell.

What do you guys think? it’s very hard to find something around my area that will cash flow with little or no money down and in a decent neighborhood. This will be my VERY FIRST investment property and I want to do it right. Are my expectations too high in finding the right property: great location, below market, near move in condition, and cashflow.

I would worry more about this:
“I will actually be negative cash flow since I don’t have any money down.”

Than this
"the one thing that’s holding me back is that it’s right next to a cemetery. "

Definitely need to worry about the negative cashflow. What’s the upside? Appreciation? If you’re counting on that, then you’re speculating, not investing. And that’s okay if that’s what you want to do, but know what you’re doing.

Are my expectations too high

Yes, they are. You’re wanting a great location, a low, low price, no rehab and great cashflow. That’s next to impossible for an experienced REI to find (the needle in a haystack).

What you should be looking for is a good location, a low price (that you can negotiate lower) because it needs some work. Find that and it should cashflow fine, if you want to hold.



It’s people like you I will be buying homes from in the next few years. How do you know this lil gem is even worth $199,000??? What if it’s worth $150K in five years? Plus the negative cash flow, you will be next victim, I mean client.

The house is built on a block of newer homes and surrounded by much older homes before the 1920's. the one thing that's holding me back is that it's right next to a cemetery.

Wasn’t there a movie about this house…“Poltergeist”?

Run…Run very fast ;D

In all seriousness Raj is right. Don not try to force a good deal. They are out there. Just keep looking. Good Luck!

Wait wait wait hold the press!!

How far below market are we talking here?

Is there anyway to pull cash at closing to cover the negative cash flow?

Let’s just say there is 40k in equity and the negative cash flow is 400 per month, That will cover the negative for 8.33 years. now if that same property is going up say 4% per year after 5 years refi and it will cash flow!

Here is the fact not all areas of America have cash flowing rentals… And if something will not cash flow MAKE IT.

Why pay 199K when you can get it for 150K next year? The credit bubble is comming home to roost. Heck you can get 5.5% return on a 12 month CD right now!


I heard a comment once that has stayed with me. “You make your profit in real estate when you buy” So, a purchase that starts out in the red would violate this rule.

Since you are focusing on rentals, you need lower monthly payments than the rental market. Find motivated sellers who may sell subject to, and/or finance on attractive terms. Let them know you are an investor and you cannot buy unless you have room to cover vacancies and repairs.

If they are motivated, they will allow you to work out a solution to their problems that gets you the cash flow you need without being upside down.

In Christ


   Where did you ever get the idea that it is only worth 150k?

If there is cash in it do it!

I could ask you the same question, just because some perky Realtor (r) puts a 199K value on it, does not mean it is worth that. Also you have to factor in the declining real estate market. The market is slowly turning into a buyers market, why pay retail?

Also a question to the original poster, if you think you can not rent it, why even bother buying this in the first place? Renters will rent anything if the price is right.

The market to sell/rent to gravediggers is very limited. But, I did notice quite a few Adams famillies in the white pages.

Also you have to factor in the declining real estate market. The market is slowly turning into a buyers market, why pay retail?

No need in arguing about the value of a property that no one on here knows anything about, other than what was posted. It could be greatly more, or greatly less than what’s been posted.

However, the above statement intrigues me. Are you a bubble guy, Dan? “THE” real estate market, as in the U. S. real estate market? Maybe your market, maybe xanga’s, but not everyone’s market is a declining market. Heck, my area has been a buyer’s market for the past 5 years and is slowly becoming a seller’s market, at least to an extent, mainly because of a massive influx of people to the area.

And as an investor, you should NEVER pay retail, period. A spectular pays retail and hopes for the best.


You have a lot of feedback already on the purchase decision, but not a lot of rationale behind the advice.

Let’s just talk about this property as a long term rental holding. There are three advantages to rental property ownership
[]Cash Flow,[]Appreciation, and, [*]Tax Benefits
Ideally, you want a positive cash flow, a reasonable expectation of future appreciation, and the opportunity to shelter your rental income from taxes. Personally, I won’t buy a potential rental property unless two of these three advantages are in my favor. I suggest that for your first rental property acquisition, you want all three to be favorable to you.

The positive cash flow is needed because you need a cash cushion to pay the bills when you have a vacancy period, or an unplanned repair turns out to be quite expensive. Positive cash flow lets you build a cash reserve so that, in time, you can handle anything that comes up. If you hold the property long enough, your tenants buy it for you – free and clear ownership, courtesy of your tenants. The first question you have to answer is: What is the market rent for this property?

Appreciation depends upon several factors not all of which are under your control. The first is location. Is the property in a good school district, in a good neighborhood, and in an area that seems to be desirable? If so, then the cemetary next door won’t appeal to everyone, but someone will still buy the property if your price is right. This property will still appreciate like all the others in the same neighborhood. You can market the peace and quiet the owners will enjoy next to neighbors who never make any noise. If the cemetary view is unnerving, maybe you can erect fencing to minimize the view effect. I am just saying that the cemetary will present some marketing challenge, but if the area is appreciating then this property will also appreciate.

There are always buyers for every property, if the terms are right. Rather than a conventional sale, maybe you will do better to sell this property on a lease option or on a contract for deed to a credit blemished buyer. This buyer will not be concerned about the cemetary at all if he can purchase a house with no bank qualifying and with blemished credit. Plan for the buyer to repair credit over the next couple of years, then finance or refinance the property to give you a delayed payday.

Tax Benefits are a bonus. The depreciation expense allows you to shelter your positive cash flow, perhaps even show a tax loss on paper. Never buy a property just for the tax benefits if tax benefits are the only favorable advantage.

Appreciation is not guaranteed. For many markets, property values follow a traditional business curve. There will be period of rising prices, followed by a period of falling prices, followed by a recovery to even higher prices. This cycle repeats itself every few years. The trick is to sell at or near the top of the cycle, and buy at or near the bottom of the downturns. With long term rental property, you don’t need to be that concerned about your entry point. If you buy at the wrong time, your positive cash flow affords you the luxury of waiting for the recovery to push your property values higher.

Cash flow is most affected by the amount of your down payment. A property you purchase with 100% financing will not cash flow as well as the property you purchase with 80% financing. There are some criteria I use to determine whether the cash flow is sufficient to support the property, and whether my return on investment is good enough for the down payment I will make.

This site has a free cash flow analysis spreadsheet available to download that may give you a better grasp of these discussion points. Just click here
Cash Flow Analysis Spreadsheet

Ultimately, the decision to purchase this property is yours, and yours alone. A better deal may be just around the corner if you wait. Don’t be so anxious to purchase your first investment property – don’t be a motivated buyer.

Thanks for this info! I really appreciate the advice with logic behind it! I will keep on looking for the right property.