Is this a good deal?

[Thomas Austell]

I have a unique investment opportunity I would love someone to help me think through. Please give me feedback as this doesn't quite fit into typical calculators and I'm not confident with my current calculations.

I have signed an off-market Agreement of Sale (executory contract) on a property in the Phoenix suburbs. This single-family home sits on a 1.5-acre property and is 6,400 sf, six bedrooms, five bathrooms, a pool, a hot tub, and an expansive balcony. The property has documented annual rental revenue of $140,000. 

DEAL BREAKDOWN

EMD: $50,000

Sub-To (with a 3-year balloon): Mortgage takeover is $5,900/month.

Purchase Price: Agreed upon variable price for 3 year period.

Year 1: $2.25m

Year 2: $2.35m

Year 3: $2.5m

ARV: $3.5m

Estimated Rehab Costs: $250,000-$300,000 (Rehab had already begun and I have all the contractor work orders)

Exit Strategy:

1. Fix and Flip

2. Refinance and rent as STR (current market projections are $175,000-200,000)