First Deal!!! (Insert high five) financing strategy?

Question

Hello BP members.  I've been reading and learning from all of you for a while now, waiting for an opportunity in my area to jump on.  While sitting  on the sidelines as prices increased by double digit percentages this year, I decided to get my (financial) house in order, so when an opportunity came my way I was ready. I have paid off my mortgage and last week I negotiated my first investment property!!! Due to the nature of the sellers move, I have 8-10 weeks to organize and complete financing on my end. I’m fortunate enough to have a couple different financing options and am open to creative options as well. I’m hoping more experienced minds would give me their opinion on the best mortgage products/acquisition/strategy to implement for the down payment and mortgage  (heloc,refi,2nd home loan,primary). My current plan is to buy and hold (brrrr after 6 mos if needed). I’ve listed the basic info below.

• Thank you for your guidance!

• Property Info
• FSBO
• NW Orange County, Florida
• SFH ‘96, 2,600ft, 4/2.5, pool, 2 barns, 2.5 acres
• PP-$350,000.00
• Minimal cosmetic repairs/cleanup $10k
• ARV- 520,000 (Zillow currently 510,00)
• PropTaxes- 4,800/yr
• Prop Ins- 3,000/yr
• 
• Qualification info (for loan)
• Credit 740
• Primary residence value $550K (no mortgage)
• 20k cash (earmarked for property)

Caitlin Faulk · Answer

@Greg Scott Thank you! Yes, I understand your concerns. And they are legitimate. I was actually saving this topic for my second post, lol. Since you asked, the area in which the property is located is going through a huge transition. New construction, on small lots is consuming the majority of the rural land. There are those who want land, and it’s becoming hard to come by.  A brand new k-8 school is expected to open in 2022. It is already a talking point and very desirable. Flipping it is an option, although I feel there is still quite a bit of appreciation to happen in the next 12-24 mos. Ideally, I’d like to hold on to it and rent it in the meantime. Inventory of this kind is virtually non existent in the local rental market, so it’s very hard to say what it’s value would be to someone wanting land who has horses. I am hoping someone who is local to Central Florida and has an understanding of the boom happening in NW Apopka will see this post and give their two cents. Currently, my focus is determining the best loan strategy to implement for the down payment/mortgage.

Greg Scott · Answer

Congrats on your first deal.

You didn't indicate what this could rent for, which is critical for a buy & hold property.

Regardless, this doesn't seem like an ideal buy & hold property: it is fairly expensive, with a massive piece of land, two barns and a pool (which adds liability).  The number of renters wanting that kind of property has to be fairly limited.  Have you considered just flipping this for cash to buy more property?