Renting Primary Move to Live In Flip

[Tom Fontoura-Sutliff]

Hi Bigger Pockets,

I know this topic has been discussed ad nauseam but I'd like get my personal situation looked at.

We've been looking for our first rental unit nearby but in our search my wife and I found a house nearby that we feel could be a good Live In Flip. The house needs cosmetic updating but totally livable as is. What makes it interesting is it has several parcels of land with the sale of the house which we could probably sell off the larger parcel for about 25-30% of the total purchase price.

I know the basics of Section 121 but I'm trying to understand if there is a way to extract value from our equity position in our current house to make this a better choice than finding a straight rental.

Current house 

Purchase $215K 

Current Value $280-290K

Owe $160k 15 year mortgage at 2.75%

Mortgage + Tax + Insur $1450

Possible Rent $1800-2000

Possible Live-In Flip

Purchase $300K

Repairs ~$20k-40k

ARV $325-350k (excluding land to be sold off)

Land Parcel Value to be sold off $80k-100k

I would love to hear your creative thoughts on this situation and how I can optimize.

Thanks!