Unique Take on the BRRRR Strategy

[Desirae Price]

Hello BP, 

 I want to get feedback on whether what I’m thinking could actually happen and it still be a successful first deal. 

I have the opportunity to buy my neighbor’s house. My grandfather is actually renting it from him and they have given us first right of refusal to purchase the property. The house would be bought around 170k with comps around 400k. The house is very livable, clearly, if my grandfather lives there. That being said, I don’t need to rehab it immediately. I plan to just let my grandfather continue living his life there for an extremely below market rent. I could ask for more, but I feel that’s just not being a good granddaughter :)

Questions:

Would the strategy still work in this situation without renovating the property? 

Would the appraiser just got off the market value of 400k? 

Could I just purchase with a regular conventional loan if I don’t plan to renovate? 

Anything comment will help me understand this situation. Thank you!

[Lee Ripma]

@Desirae Price Sure you could get a conventional loan now. If it will appraise for a higher value after close, in theory you could refi it. However, you’d then have to pay the higher mortgage, so make sure you run both scenarios with the below market rent you are giving your grandfather. It seems like you could buy now and flip it in the future, once your grandfather moves out. What’s the current rent and the market rent?