## Single-Family Rentals for Pet Owners in St. Louis’s Core Neighborhoods ### Investment Thesis Target bankable small single-family homes (1-2 BR) on oversized lots in established St. Louis neighborhoods, creating premium rental products for single professionals with pets who value walkable urban living with private outdoor space. Long term this is a land acquisition and banking strategy, until then it is a bond without the political variability. ### Target Properties - **Price Range**: $150,000 - $200,000 (up to $300,000 for exceptional properties) - **Size**: 5,000+ sq ft lots - **Era**: Post-war construction (1942+) - **Foundation**: Poured concrete or concrete block only - **Condition**: Sound structures with dry basements. Minor cosmetic update needed OK. ### Target Neighborhoods **Primary Markets** (North of Arsenal, South of Delmar): - The Hill - Dogtown - Rock Hill - Central West End - Webster Groves - Brentwood **Characteristics**: Walkable commercial districts, strong neighborhood associations, stable demographics, limited rental inventory ### Financial Model **Acquisition** - Down Payment: 40-50% of purchase - Loan Amount: 50-60% of purchase **Monthly Income** - Base Rent: $1,400-$1,500 - Pet Fee: $50-$100 - Garage: $50-$100 - **Total**: $1,500-$1,700 **Monthly Expenses** (40% down) - P&I (7%): ~$665 - Property Tax: ~$200 - Insurance: ~$150 - Maintenance: ~$150 - **Total**: ~$1,165 **Net Cash Flow**: $335-$535/month **Cash-on-Cash Return**: 4-6% on total invested capital ### Competitive Advantages **Supply Constraints** - Only 1-3 pet-friendly houses with yards available per neighborhood - Apartment complexes cannot replicate yard access - Zoning protects single-family character **Demand Drivers** - Dog owners avoiding apartment living - Remote workers seeking home offices - Lifestyle preference for walkable neighborhoods **Premium Pricing Power** - 20-30% premium over apartments - Low price sensitivity for perfect product fit - High tenant retention (moving with pets is difficult) ### Risk Mitigation - **Conservative Leverage**: 40-50% down payment provides downside protection - **Prime Locations**: Established neighborhoods with proven stability - **Multiple Exit Strategies**: Rental income, owner-occupied resale, redevelopment - **Quality Tenants**: Higher income pet owners in professional neighborhoods ### Value-Add Opportunities **Initial Turn Improvements** - Privacy fence installation for secure dog yards - Garage addition/renovation where missing - Professional landscaping for curb appeal and privacy - Pet-friendly flooring (luxury vinyl plank) - Updated kitchens and baths to market standard **Long Term** - ADU development as zoning evolves - Lot splits in appreciating neighborhoods - Assemblage for larger development - Rent to Own for margin improvements ### Key Metrics - **Target Portfolio**: 10-15 properties over 3 years, avg $100k down per property - **Total Capital**: $1-2MM - **Annual Cash Flow**: $40,000-$80,000 - **Equity Position**: 50%+ for HELOC flexibility ### Liquidity Strategy Portfolio lending approach for maximum flexibility: - Build portfolio to 10+ properties for institutional lending - Cross-collateralize properties for portfolio loan - Maintain all cash flow and appreciation upside - Use portfolio line of credit for new acquisitions ### Exit Strategies 1. **Hold for Cash Flow**: 4-6% cap rates with appreciation upside 2. **Owner-Occupied Sale**: First-time buyers seeking starter homes with yards 3. **Land Play**: Redevelopment as neighborhoods densify 4. **Portfolio Sale**: Package multiple properties for professional investors