New Purchase: your opinion

[Ron Flatt]

Okay. Just purchased 3/2 bath SFR, 54K.....

Rehab will amount to about 25-30K....

After Rehab it will have a $125-135K  or rental income of 1300-1400 per month.

I am financing after rehab, which will have all or most of my cash out of it.  

What would you do? and why?

[Austin Fruechting]

Some basic analysis (and I'll leave carry/closing costs out of it)

REFINANCE:

Let's say it appraises at $130k.

Your all in at $84k 

Assuming you are refinancing at 75% LTV you cash out $97,500

You put $13,500 in your pocket, cash flow going forward, and someone else pays the mortgage

SELLING OPTION:

Let's say it appraises at $130k

After realtor fees, negotiating, and concessions say you get 90% of appraisal 

Net: $117k

You're all in at $84k 

Profit: $33k

What's your normal tax rate? 30%?

Actual net: $23,100

.

The actual difference is less than $10k in your pocket.  Personally I would rather have $13.5k and a property than $23k and no property.