How to structure? Interesting BRRRR (maybe flip) opportunity

[Nicholas Morgan]

Hey everyone, would like to get some input on this opportunity. We've only discussed this over lunch once and have plans to continue to flesh out a plan forward. Hopefully your input will help us.

I have a friend who has a rental property he wants to sell to purchase rentals closer to his residence.

Property details:

-Remaining loan balance: $45k

-Current renter has been there for ~7 years and is month to month

- rents for $900/month (rent hasn't been raised in 7 years)

- my friend speculates about $15k rehab needed to get to an ARV of $100k

Goals of friend:

- get rid of property with a bit of a cash in pocket. Would fix up and sell it himself, but then would be knocked with capital gains taxes and recuperation taxes from depreciation over the years

- doesn't have much time or desire to rehab the property himself right now

Here's the potential plan forward:

- the tenant is given some amount of time to move out.

- my friend pays off the remaining mortgage note of $45k

- my friend deeds me the property

- my friend pays for all rehab

- my job is to do all the work (I'm handy) and handle logistics of rehab if a contractor is needed.

- once I finish rehab, I'll put a renter in for $900 (or raise to market rent at this time. If this is fall/winter, would probably rent for lower price on a 6mo lease to fill quickly and get me to May 2020 timeframe and raise rent then)

- I'll do a cash out refi for ~75% LTV...so $75k cash out which will all go directly to my friend. This will repay his 45k+15k for rehab +15k cash in pocket.

- I'm left with a cash flowing property with none of my own cash in.

Alternate strategy would be to sell the property for $100k instead of renting and split profit 50/50 (~$15-20k each). But I believe if be hit with a massive capital gains tax then too. Plus I'm focusing on buy/hold so flipping isn't my first choice.

What do you think of this plan? What are we forgetting? This seems like a win-win, but I want to make sure there isn't something major were missing.

Thanks in advance!