In over my head or should I just go for It?

[Shaun Hunt]

So, I have this sickness that started about five years ago. It has now put me in debt over $650,000. The bad news is that my Realtor called me up and told me of a home that just came on the market. He felt like it was way undervalued and it would be an easy flip.

Because of my sickness, I took the bait and I am now under contract. :)

The home is listed for $195K. Chances are it is worth closer to $250K. I have been waiting on word from the appraiser for two weeks now. I hope to find out tomorrow what the supposed value really is. Three other realtors have wondered if it is a short sale because of the low price. My inspector said the same thing.

The current tenant wants to continue the lease, however, the price will have to increase. He has paid $900 for the past three years. Rent for that home should be at least $1,400.

Here is my plan. Pay $50K from a HELOC at 6% for the 20% down and rehab, loan 156K at 4.8%, keep the home for at least one year to avoid 30% capital gains, sell the home in a year and hope my plan worked to come away with at least 40K.

If I do this, I will owe just under 1 million. My W2 job pays only 52K. Chances are, my total assets would be clones to 1.3 million after acquisition. All of my other properties are cash flow properties, this one would be for appreciation.

I have a hard time seeing a potential gain of $40-50K go down the drain, yet this is quite aggressive.

Are there any other questions I should address or should I continue on this path?