After much research, and half a dozen offers outbid...We are under contract with our first flip (yay!)
We are purchasing the property and making the repairs with a hard money lender, so all cash. This is our first time working with an investor (and their first time investing in real estate). We have a great communication with them and all plan on learning a lot.
On this deal, we are purchasing to fix & flip, then giving the investor a percentage of the profit (plus a small interest % on their money while we flip).
The deal is:
Small 2b 1ba house
Purchase price $42,500
Rehab costs ~$25k (mostly cosmetic, like new kitchen/bath, also new windows)
Which keeps us at 75% value. We realize we wont get rich with this one, but its a small, safe option in a hot neighborhood (average DOM is, like, a week.)
BUT- Rental here is also a hot commodity. We could rent for around $900/mo, and obviously rehab would be a lot less for rental-quality updates. Probably $6-8k.
I'd like to know how to present this option to our investors to see if they are interested. How would you structure a rental deal like that with an investor? I'd love to give them a short-term out (we purchase the property from them by getting a mortgage after X months) and a long term option (say, 3 years). In the end though we would like to own this property ourselves, not just manage it for someone else.
The point of this house is to get into the business, get our feet wet, and begin having our own cash reserve so we don't need an investor.
Any advice and experience welcome. We are new to this and open to learning!
From a buy and hold standpoint I think it looks pretty good. It seems like you got into it the right way so I would hang on to it and rent it out, providing managing it won't be to much hassle. Nice Deal!
I know someone that will do hard money lending to buy the home and rehab it then later refinances to the secondary market to get the best rate. If you figure out what the profit is they would make and then agree to pay them that when you refinance plus giving them their interest I would think they would be all for it.