I just got a house under contract at a great price: $64,500, estimated ARV $136,900. It will need at least $30k worth of rehab, but still could be a perfect BRRRR. My personal capital is tied up in another BRRRR at the moment, so I will need to find a private or hard lender to complete it... Which would ultimately eat some of the equity I would get in the BRRRR.
A family member told me they LOVE the house and wish they had won the contract. They're looking for a fixer-upper and don't mind working on it while they live there. How can I take advantage of this?
Here are some options I thought of:
1) Close, re-sell to them with owner financing enough to cover my mortgage and still cash flow a little?
2) Lease at a lower rate if they pay for the rehab while they live there?
3) Sell it to them outright for $75k after I close?
4) Assign the contract?
Open to anything OUTSIDE of the BOX!
Hey there @Dakota Adney
At least two important details missing:
Does said relative have money and want to fund the deal? If not, what funding method would they use had they "won the contract"?
Definitely DO NOT do Option 2. Sounds like it will end bad and won't really get where you want to be.
Definitely DO NOT do Option 3. If you're going to sell it to them, may as well just assign it and not pay all the selling costs
In Option 1, are you saying you would buy it in cash? Then just sell to them on owner financing? I would NOT recommend getting a bank loan and then turning around and "owner-financing" it. That isn't a win in my book.
Since you kicked this off with wanting to BRRR, I suggest you stick to your plan. Figure out how to fund it (a whole different discussion), and include your relatives on the next one as a partner, if you insist. BRRRR implies you want a long term cash flow play, plus some of your money back. I don't think most of your options really get you there... So BRRRR that sucka!