Need help on first deal

[Steve Raiken]

I have a friend who's successfully been acquiring real estate properties for 12 years. He has about 12 rentals and wants to partner up with me on a deal and is looking for a long term relationship. I've known him for a couple years and he is a really great guy that I trust. But.. being it's my first deal wanted to run the scenario by you guys for some help to make sure this is a fair deal because I"m honestly not sure.

The deal is for a 4 bedroom 3 bath - 3,700 sqft house from the 1800's. The house comes furnished and is pretty much in perfect condition with no work needed. The house is zoned commercial and residential and has a separated 3 bay heated garage on 2 acres of land. Could possibly rent the bays.

 I would be responsible for putting down the down payment and paying all holding costs for 6 months + helping to manage the property. My partner found the deal + we will be accessing his private funding which is 10% for the downpayment then points and interest. I wanted to do this deal with him because he has the experience and I'd love to learn from him.

The house has been the market for over a year but hasn't been selling. It started at 400K back in 2014 and has been dropping every since. Now it's on for 320.

Considering the way the property is zoned + the plot of land and the 3 car heated bay my partner think the house could get appraised for over 400 which would get my money back in 6 months through refinancing. Does this sound right and or possible?

The plan would be to get tenants in immediately via a bed & breakfast and or Air BNB which would help pay the holding costs.

If we don't utilize air bnb or b&b rent on the house would maybe cover our mortgage payment, but would probably fall short.

Here's the #'s on the deal....

Purchase price - 260K

Down payment - 26K ( Paid by me )

Closing costs - 5K ( Paid by me)

- 31K down at closing

Remaning balance - 234K

Points to be paid - 12K

New Balance - 246K

Taxes - 600/ Month

Insurance- 250/ Month

Utilities - 300/Month

Interest - 2450

Holding cost for 6 months - 3,600/ Month

31K Up Front

21,600 - Holding costs

After refinancing mortgage should be around 2,400 a month. The goal would be to refinance and get my money back that I invested initially.

The contract would go under both our names and he agreed to back the deal with his other houses too in order to secure financing. Also we agreed to split any rehab costs after the refinancing. 

By the way my partners ultimate vision is to create a bed & breakfast. We currently have 4 rooms available and are in a pretty decent area. From our research it looks like 60% occupancy rate is normal throughout the month... any thoughts on this?

Anyways, this is the deal and would love your thoughts!

Thanks!