Flip, BRRRR or no deal?

[Antoine Justiz]

Hello Everyone, I am a new investor jumping into a short sale deal and would like to ask for your opinion. Should I flip, BRRRR or walk away? Purchase price = 400k. It's a 3 bed 2.5 bath SFH, looking to make it a 4bed 3bath with new BR in attic and master bath addition. The place is in poor condition and will likely take $80k in repair. ARV looks to be between $560k and $600k. It's an upper middle class neighborhood in northern New Jersey. Several houses in immediate vicinity range from $600k to 1.2million. I am thinking flip is the only way to go as I'll have to leave money in on a BRRRR (490k = 400+80+closing) as bank will only give me 400k (75% of $600k) and I'll be cash flow negative after refinance with only $3500 in rental income. I am considering using a conventional interest only mortgage and a private money lender at 12% interest for the down payment and repair costs. The flip works under an 80% rule (600k*.80-80k=400k), but not the famed 70% rule, though I have read u can use %80 in pricier areas. Thanks in advance for your insights... Marc