First Rehab- First Rental Out of state - am I crazy?

[David B.]

Hi all!

So ive found a really interesting property for 600k in the Miami area. It needs a substantial amount of updating, but the property has a lot of options in terms of what I could do. For instance, a rehab could be as simple as kitchen /baths/ cosmetics. Buuuuut there’s also room for a pool in the back. And the potential to take some walls down. New modern fence. Etc. 

However, in theory, I really don’t have to do any major work to it and it’s still rentable. It would be pretty undeveloped compared to growing properties in the area. but it would cash flow.

From a Rehab perspective, I estimate 50-120k in costs depending on what I want to do. 

If I chose to make it a luxury home with a pool, rents could be as high as 8000 a month. I could also short term Airbnb it for crazy money. It’s only a short drive to Miami Beach from the property. Although not sure I’m ready for that. 

There’s also the potential to just flip it if I needed the cash. Sold comps in the area reflect an average between 900k to 1 million. 

What I want to do is purchase the property, rehab it, then rent the puppy out. if any of my various number crunching scenarios are correct, the property is a cash cow on the other side of the rehab.

OK - so what’s the problem?

Well, a few things…

1. they only want a cash offer. I’m about a 100k light at the moment. 
2. ive never rehabbed a property. This would be my first. Yikes. 

3. the property is out of state (but I could live there during a rehab or to set it up renting) 

4. I have a primary residence I'm closing on in March that I'm concerned this deal could somehow mess with. Like somehow this would screw up my DTI for a lender and I wouldn't qualify for the house. Or god knows what.

5. I’m generally a rookie investor… I only have one rental property thus far and I’m still learning. 

Rookie or not, I have a fair amount of cash for building my portfolio, and I really think the numbers on this property make sense, even if I do have a lack of experience. 

I guess I’m wondering if anyone in the community has tips for out of state investing? Also - will doing this deal somehow screw with my financing on the primary residence purchase (for 721k) I’m closing on in March?

My strategy for this property would be to 

A) buy it cash 

B) delay finance on the other side. 30-45 days after closing. Also a first for me… 

C) get a private loan for the rehab costs.

D) pay down the loan and have smoking high cash flow property on a mortgage that only costs me 2500ish a month. And have built a ton of equity in the home. 

I like this deal cuz it has a lot of options and ways to make money…. But you don’t know what you don’t know (as they say).

Open to any and all thoughts before I begin this adventure. Yes I’m a rookie, but I tend to think that fortune favors the bold and this property may justify a big move. 

I just don’t want it to also punish the foolish. Haha

Thanks everyone!