Looking at a Deal / Is it Any Good?

Question

So, I am looking at a house in Montevallo. It's listed at $115k with about $40-45k in rehab. Would you flip it or rent it? Also, do you think this is a strong deal?

3/2 1539sqft Built in 1995

Any input is appreciated thanks!

Greg Scott · Answer

Wow, you haven't provided quite enough to analyze this so I'm making assumptions.If you think this house is a solid comp, now you have an ARV.Zillow thinks that house would rent for $1,600If you could buy that house for $115 and it needs $45K in rehab, a hard money lender would probably lend you up to $175K which means, you could buy this house for nearly $0 out of pocket after closing costs and holding costs, assuming you have a good, ethical GC that can do this repair for you.I don't have full information, but it looks like your total loan payment (PITI) would be around $1,300 per month.  This means you could generate a positive $300 per month when this property is leased.  Assuming your rehab budget fixes EVERYTHING that is broken or might break soon, this is what you could expect in the first 12 months.With all this in mind, I like this as a long term rental.  Hold for a year or two, then sell, pay long-term capital gains and move on.  For a flip, the short-term gains are punitive.