Closing on our first investment..Flip it or Rent it?
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.
SO.
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
ARV $103k
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!
Thanks!