To lease-option or not...Creative financing help!

[Chantal Jones]

I'm a first time investor. I have the opportunity to get into a lease option for a property that I'd ultimately like to buy & hold, but I'm trying to figure out the rehab financing. It's a distressed duplex going for about 58K. I've estimated ARV to be about 150K. I can pay for the downpayment via my savings, but the property appears to need a full rehab for both units. I say "appears" because I haven't viewed the property yet (but will this weekend). I'm just trying to think about all my options in advance. (I would also pay for the monthly rent via my savings/day job – in speaking with the owner, he said it would be a minimal amount because the property needs work).

I don't know exact numbers on what the rehab will be, but I've been doing some research on the costs and am working from an average at the moment, as I look up what basic rehabs for kitchens, bathrooms, electrical, plumbing, new roof, etc. could be. The best thing will be to get an inspector to inform me of everything that needs to be done, then get my estimates.

I'm already pre-approved for a mortgage with a bank, but want to use that as my very last resort bc they're strict with who you can use to do the rehab once you're under a 203K loan.

My finance options include:

• Using 0% CCs for the rehab. I only wanted to use CCs if the rehab is around 40K or less. I have good credit with a very low credit utilization at the moment, and I don't really want to jeopardize it too much. I know I could pay for work as it gets done, but I'd want all work completed within a 4-5 month time frame to get it rented out and start generating income to pay off the CCs. I know I could roll over to other 0% CCs as necessary bc it's a strategy I implement now for myself personally. I've never used it with that much money though. By the time the option to purchase rolls around, I wouldn't mind putting a mortgage on it at that point.

• Negotiate a lower purchase price, since it is a distressed property in need of some work and purchase the property now via HML (incl funds to rehab the property). I just don't know if it's worth it because a mortgage would provide me with lower rates. And I also don't know what the best way to repay an HML would be. What would that be?!

• I could also do it as a fix & flip, but that honestly hasn't been my focus. I wouldn't mind doing the HML for that option, and lining up other exit strategies just in case.

For those of you with a bit more experience than me, what options would you suggest?

I appreciate your time and input :)