HELP: 6 Month Closing Date vs. Buy And Rent Back
Hey all, I have a potential deal that I have been working on and I could use some advice!
(apologies for how long and confusing this explanation will be... its sort of a complex situation!)
So I had an off market deal brought to me and my partner, a track home in a really hot small commuter town just outside of Portland OR. 2004 built, all the big stuff is still in great shape, the kids just destroyed the paint and carpets with markers and whatever else kids do!! (not a parent yet myself, so apparently I am in for quite the surprise some day!). The ARV will be around $290,000 being very conservative, can get the house for $235,000. I actually know this guy, so there is a little bit more of a friendly conversation around this deal. He and his family are moving to a new home on some land outside of town and don't want to deal with the headache of trying to bring their home up to standard to sell on the market.
Here is the hard part! He wont be ready to move out for 12-16 weeks. So the crossroad I am at is whether to buy the house from him now, and rent it back to him for the time being, or do I put the home under contract with a 18 week closing date? Also he has all the money needed for the next deal but would like a little bit of this deal in case something comes up.
Under Contract for 18 Weeks:
Pros-
Delaying the date we have to cough up the money would really help, as my partner has most of the cash we typically use to buy flips tied up in a rental home that he will re-fi here in the next month or so, making it so we don't need to try to come up with any creative financing work around for this deal but can just pay cash.
Cons-
Waiting so long to get the house could mean missing the good part of the selling season and we could get substantially less for it, so committing to it and having to wait for so long seems sort of risky / foolish??
Buy It and Rent It Back:
Pros-
We lock in a really good deal, get to help out him and his family, make a couple hundred bucks for having to wait before we flip.
Cons-
We don't have the cash available, so we have to really push to get some other financing (hardmoney, bank loan, private money loan, or ???).
I am really stuck here. Not sure if there is a clear answer right in front of me and I just cant see it, or if I should just chalk this deal up to a lose and walk away from it. Any advice, opinions, stories of past deals would really be appreciated!
Thanks so much,
Kevin Callahan