Augusta GA buy & hold with a twist - any ideas?

[Michele Z.]

Hi Augusta peeps,

Active duty family relocating to Augusta, GA - for a year - this June. We've been advised to look for something that only requires cosmetic updates on our first time out. We've also been told not to look S of Gate 1 since we'll be initially living in the property.

Looking to do a min 4+2 SFH ranch buy & hold that we (family w/ 1 toddler and 1 elder big dog) need to owner occupy and rent 2 rooms out for about a year before turning it into a STR/military crash pad or LTR. Conventional mortgage b/c we're saving our VA Loan for D.C. (as we can easily be forced to max it out there and want the lowest funding fee.) Great credit scores, no current debt.

We want to rent out two rooms to more than cover the PITI on this property so that we can use our BAH and remaining capital for some BRRRR investment(s) in the area so we can get that capital back out when we move, likely to the DC area, in 2021.

For the sake of round numbers, let's say we have $40k liquid to play with after reserving money for closing costs of the first property and 6 mos of rent reserves. Have access to a NFCU CLOC for $15k plus credit cards to fund rehab. I hoped we'd be able to find something and only put around <$20k down on the mortgage. Thought we could refi before we left to get at least the rehab money out - especially if we buy a place early b/c we need rehab before we can occupy. 1 year of seasoning would complete approx 4-6 mos before we pcs out again, so the timing seemed to work and I'd of course discuss the refi with our lender ahead of time.

I think I've seen (virtually as we're out of state) most of the MLS inventory in the Grovetown/Evans/Martinez/West Augusta area, thanks to our agent. Things are seeming to break into 3 categories.

a) "Working class" 4+2s that are really tiny bedroom 3+2s with poor garage conversions (so a random 4th "bedroom" off a kitchen, nowhere near bathrooms) or horribly awkward floor plans. They need bathroom additions and/or walls to come down.

b) 4+2s with potential in such poor and/or original condition (60s/70s/80s) that they require major rehabs (over $50k) with something going on in every sq ft of the house. We're talking kitchen, bathrooms, all paint and flooring, fixtures, often new roof/hvac/water heater/appliances (or some combination thereof) and some exterior work too.

c) Everything else "middle class" seems $220k-$250k+ mark (often still quite dated) and are therefore too expensive to cash flow at my budget level.

My most promising option I'd be comfortable offering $165k and paying my own closing costs. Remodel isn't complete so I can force a little equity, but the majority of the update has been done. Even after jacking up rent to the very high end of what might be possible, I cash flow but only get a COC return of 5%. If I refi this later I could lose the cash flow.

Is this just the way deals work in this area?

What am I missing. I'm feeling I need to realign my expectations. Or is it just that winter inventory is slim right now?
It's starting to feel like we just don't have enough money to buy this weird owner occupy hybrid situation and have the money to do a lower income neighborhood BRRRR. But if I just put all our eggs in one basket, how to I get money clear to take on DC next?

I have to find something, we have orders and will arrive come hell or high water in June. And we have a 60lb dog, so we can't really just rent and wait for the next market. What a waste that would be! There must be a way.

Any insight is appreciated.