Investment Wall. How to make this deal work?

[Brandon Gall]

Hey, BP community, 

The equation: I am trying to solve. There is a property that is a 2/2 duplex, built in 1997, close to a grade school, and park. It has an unfinished basement that is equal to the size of the main floor of each unit. The asking price is $290K. The rents are month to month and are well below market value.. I think about $1,000 per month per unit.  

The Plan: Offer $270K, put $30k into finishing the basements into legal bedrooms making it a 3/2 with an additional living area or a 4/2. Projected rents for the 3/2 would be $1,600 per unit. A conservative ARV would be around $330K.

The Hesitation: With a 25% down payment, and roughly $30K (1,000 sq feet rehab needing floors drywall paint, $15k per unit in the ballpark?). Holding costs and the uh-oh money fund puts me at roughly a $105K investment. A cash on cash return of 3.42%. This is about 70% of my cash on hand most of which is in the stock market and performing better than 3.42%, but obviously missing the other benefits of real estate. 

I have three other rentals all of which have some equity built up in them. I should be able to still cashflow on my duplex if I cash-out refinance. That could give me about $56K at a 70% LTV even with interest rates hovering around 6.5%. But this is my best cash-flowing property...

Are there other loan options that could have a smaller down payment other than a conventional? DSCR loan seems like one option but wouldn't be positive it would work here.

A 1038 exchange would be possible, but average days on market for multi-families are over 90 days and i would be selling my best cashflowing property. 

Any ideas that I am not thinking of? Oh, and i can't buy it as a primary to live in the one side. I just closed on a VA loan for my primary in Florida two days ago..

Thank you for being an awesome community! 

Happy Mathing :)

-Brandon