Possible strategy options with current "live in flip"

[Dane Kania]

I am fairly new to real estate investing. I am currently working on my first investment property. However, as a lot of new investors I came in sort of blind. I am hoping to share my current situation with you and receive back some possible strategies to help make this first property work. The original plan was a "live in flip", with the goal of completing our project in 1 year. So here are the details:

The house:

4 bedroom 2 bath

2,400 sq/ft

Purchase Price: $281,000

Private money for down payment: 20% ($56,200)

Market trend: Average appreciation per year at 5%

Estimated full rehab: $30,000 (ballpark)

Completed rehab comps in area: Highest comparable was $360,000

Friend and I get private money from his parents for down payment. Both, very grateful for the opportunity considering they don't expect a return, but only their original investment back to help us get started. They also supply a line of credit for the rehab. Being new to investing our "house hunt" was sub par in terms of a good deal. We ended up purchasing the house at it's appraised value of $281,000 which was about $16,000 under asking price after negotiation. After, talking to a few contractors, we assumed a full rehab would run us around $30,000. We never assumed a big profit off this first project, but more so the experience doing a house flip while making something a few thousand each at the end. 

Now, we are currently working on the house and have only gotten through minimal repairs, such as paint, trim, new windows, some new plumbing etc. (we are working on the basement first as we live upstairs and are planning on switching once basement is complete).  We have a lot of work left to do. However, we are starting to think that this property could make us more money in the long run with a different strategy. I am currently reading Brandon Turners "How to Invest in Real Estate" and came across the BRRRR strategy. We are thinking we want to lighten up on our rehab cost and spruce the property up to get it to good rental standards for this area, while making some decent cash flow on top. Reasons being that, they we could avoid capital gains tax, allow the house to appreciate, and have cash flow coming in from being rented. The house itself was in really good condition despite its outdated features. 

This is where I am confused. How do we get his parents there original investment back? We feel that we have a good opportunity here and understand there are SO many strategies that can be taken. But, are unclear on which one would be the smartest to take. Is a BRRRR strategy possible here to get his money back if the deal wasn't bought at the right price? Or, is it possible for this property to make both, his parents as the private money lender and us the buy and hold investor a return? How could that be structured into a creative deal on both ends? With current financing in place there is opportunity to make a couple hundred each in cash flow per month. 

I'm hoping you all can shed some light on this situation. Please feel free to ask for more information if needed! I look forward to your responses! 

Dane Kania