Need some advise/guidance. Our situation is two fold and is as follows...
Although to date we own 2 rental properties and have done 1 flip, we want to do a house hack/ renovation for our own primary residence to live in, build equity + possibly sell 5-10 years down the road. Currently we live in an existing property we own and have not put on the market yet but will be selling this in the near future. We found a bank owned home very much below market price listed at 350k, ARV comps going for at least 500k, think this one would be closer to 550k all finished. Main problem is, there is what looks like 1-2 feet of still dark water sitting in the basement ( completely concrete unfinished basement no drywall or flooring). Our hypothesis is bank turned the power off months ago, sump pump stopped running, water from heavy rains we have been getting has just been building and sitting over time, possibly 1-2 months. This is the biggest question mark for us that could sour the deal, so far we are budgeting 50k for this issue alone.
The rest of the renovations are all manageable for us- New kitchen, new heating system ( ductwork all done), flooring and paint, among other items.
As expected, the bank has already said it's selling as is and don't seem to want to do anything at all. However, I made the argument to listing agent that they should want to spend the money at the very least to simply drain the basement water out since it's still an asset that is slowly deteriorating and losing value every day that the water sits there and investors/buyers will not want to take a risk on a property with a question mark like that. Having a mold inspector come this weekend but he already admitted that until they get all the water drained, they won't be able to fully realize the damage. I noticed there are multiple doors that do not close properly without jamming including the front door which hopefully is not due to foundation shifting, our contractor said its more than likely just a build up of moisture filling up inside and all the wood expanding and warping. Any thoughts on how we should approach this issue?
2nd piece is the house hack...We think best course of action would be to have an investor friend we know buy the house in cash, once we are done with renovations, we then take out a full mortgage on the house to cover whatever he paid for it and then pay him back with some interest. Would this be feasible? One lender agent said we can do a convention rehab loan Homestyle but I think this will be a hard sell for the bank as they will most likely want cash.
Any advice, input, guidance appreciated!! We can provide pictures if wanted as well.