Family wants to sell us house under mrkt value. What should I do?
Hello BP. I currently am trying to decide how I should act on a deal that fell in my lap. My future Mother in Law is moving and wants to sell her house. For some reason, she is intent on selling it for what she owes on it (I think she is just trying to help us out). We told her to sell it for market value and she said if we aren't interested she is just going to contact a house flipper... She says she owes approximately $143k. She bought the place in 09 for $165k and the zestimate puts it at $190k. Looking at the comps I think it could list safely for $178-180k. Either way it is definitely below market value at $143k. It is a 4 bdrm 1400 sq foot house in a decent school district. the detatched two car garage is in rough shape and I still need to get an inspection done on everything else.
I currently have about $5,000.00 in cash available to me that I could use on this project. I also have $10,000.00 that my parents stated they would contribute as a gift for my first house (they've done that with all their kids). I have a credit score over 750 and about $9k in student loans. I make about $67k/year from my W2.
I should be able to bring together $15k in cash to get this deal off the ground. But then what should I do? My plan A is to rehab with private money/hard money, rent it out ($1600/mo), and then cash out refinance to hopefully purchase another property(brrr) and slingshot my REI career. I currently do not own any properties.
Another option I was thinking is to do an FHA 203k loan to rehab the place, live there a year, and then possibly do a cash out refinance then? I am not sure if that is entirely possible and who knows where the market will be. I also don't really want to live where the house is located.. I could do it but just wouldn't be my first choice.
Another question I have is how can I leverage the equity she is gifting us in the selling below market value?
Any advice is appreciated!