If I Partnered with a Flipper Would this Scenario Work?

[Rich Dunmore]

I'm in the education stage of Real Estate Investing and still trying to put my strategy together. I'm pretty set that I want to buy and hold in order to get a sustainable cash flow but I'm also intrigued with the BRRRR strategy.

The concern I have with the BRRRR strategy is I've never rehabbed a house before and don't know what I don't know. So my thought was to partner with an experienced flipper until I can get a couple under my belt.

This is the scenario I've run through my head.  These numbers are theoretical just to see if this would create a win-win.

SFH Purchase: $60k Rehab Costs: $20k After-Rehab Value of House: $110k

Flipper would purchase the house (non-convential loan or cash) and I would kick in $10k for down payment.  He has $50k in and I have $10k in at this point.  

Flipper pays for rehab so that puts him at $70k

After rehab the house appraises for $110k so with his $70k and my $10k that we have into the house there is $30k of forced appreciation that we would split 50/50.  I would obtain a conventional loan  and pull $88k out of the house, giving the flipper $85k and he walks away.

Again, making assumptions that I can rent the house for $1300. Taking property tax, insurance, vacancy, CapEx and maintenance, and other expenses into account let's assume I achieve a cash flow of around $200. This would give me a Cash on Cash Return of about 9.5% and a total first year return of 104%.

I know its not an ideal BRRRR because I can't my $10k down payment out but I do get $22k of equity for a $10k investment and a property that looks like it cashflows decently. The other positive and more importantly at this stage of my career, I have someone with experience as a partner for the rehab portion of the project.

Looking at it from the flipper's point of view, he gets some help with the initial investment, a $15k profit and quick exit strategy.  Is that enough for him to get excited by a deal like this?