Evaluate my land contract purchase
I'm negotiating a land contract for a 2br/1ba SFR recent rehab in a college town nearby. HVAC, electrical, plumbing, and some windows replaced ~3 months ago. Brand new flooring, paint, cabinets, etc. in interior. Appliances are 2-3 years old. Just appraised right at $87,000.
Here are the terms to this point:
Purchase price: $87,000
Down payment: $5,000 - deducted from purchase price.
Payment to seller: $750/month, includes PITI. $150/month deducted from remaining purchase price ($82,000 after down payment)
Contract is renewable every 12 months.
Renter moves in Feb 16th on a 1 year lease for $1,000/month and is responsible for all utilities.
Management is in place at 5% of monthly rent.
That basically leaves me with $200/month cash flow before accounting for capital expenditures, maintenance, etc. after $50 is taken out for management expenses.
My plan would be to either:
-go through with an outright purchase before the first year, or,
-shoot for a cash-out refi after the first year term, after (maybe) putting down another $5,000.
In either instance, I would probably list it as a turn-key rental property for sale at $90,000-$100,000 and/or continue to rent it long term.
Your thoughts?
Thank you in advance.