Gun Shy- Need Help with Exit Strategy
Hi Everyone!
I just spoke with my neighbor, and they're looking to sell their house fast. They want $220,000 for the property. The property is located in Richmond, Texas and it was flooded during Harvey. Before the flood, the two story property was listed on the MLS for $289,000 for almost 1 year and no one wanted it. Since the flood, they have repair almost everything except for replacing the flooring on the 1st level. I know because the contractor that worked on their house, also worked on my property first. I estimate the flooring to be around $6-$7K, mainly installing ceramic tile and some wood flooring in the master bedroom.
So my problem is I've been crunching numbers and getting lost in it. I'm kind of in a panic attack mode because I told them I would give them an answer tomorrow. Here's what I came up with:
Strategy #1: Buy using conventional loan and rent out
Cost: $220,000
ARV: $260,000
Downpayment: 20%
Closing Cost (I pay all closing cost): $5100
Repair: $6000
Estimated Out of Pocket $55,105
Estimated Monthly mortgage with Tax, HOA & Insurance: $1725
Estimated Rent: $1800-$1900
Strategy #2: Flip
This is the part where I'm in new territory because I've never done a flip before. So the question is do I just buy it using a conventional loan and turn around and sell it while paying the monthly mortgage payment? The profit seems to be pretty slim if I go this route.
Strategy #3: Owner finance it
Completely new to this strategy. I got the part about buying the property using conventional loan and turning around to resell it at a higher price and higher interest rate than my loan. But I don't know how to analyze and calculate what my profit would be in this deal.
So what would you do?