Rent it, flip it, or walk away?
Hi BP folks! I came across a property and I'm struggling to decide if it is good for a buy/hold or flip, or if it is only good for draining my wallet and schedule.
$40k purchase price, $5k in repairs to bring it up to neighborhood standards. ARV $60k (likely closer to $65k, but I'm being conservative at $60k for a very quick sale). Repairs should be relatively quick (smaller scale HVAC repair, install basic appliances, replace some flooring, do some painting). I would hope to have that completed in two weeks (I've been working with several very good contractors in the area on another project that was much worse, so I am optimistic about time tables), but I'd be giving myself a month just in case. Newer appliances + recently repaired HVAC + newer roof = hopefully a less risky property from a maintenance standpoint (hopefully...).
I plan to purchase for cash, and either flip right away, or let it season for 6 months and get a mortgage for $45k (75% of the $60k estimated ARV, which allows me to cash out my initial investment in full).
Typical rent for comparable properties is between $725-800/mo, so I'm working off $750 for a round number on the lower end of the spectrum to hopefully attract a tenant without it sitting vacant for too long. Of the $750/mo rent: PITI $425, management $75, CapEx/maintenance $125, vacancy $50 = $75/mo cash flow. The cash flow seems a little under what I would like on a per door basis, but the cash flow listed is after I pull back out all of my initial investment.
So: 1) am I missing anything in my quick calculations? 2) would you buy it? 3) would you flip it or hold it?
Thanks!