Our 3rd Investment Property - Which Exit strategy?

[Tony Pellettieri]

We have our 3rd Property under contract and plan to close in a week. The house is in a high appreciation area. Trying to figure out what the best exit strategy is. We are open to suggestions for different strategies than we're currently considering. We've been told seller financing may be a good option and we're open, just don't know how it would all play out, please advise.

We plan on paying cash for Acquisition & Repairs. This would be our first DSCR loan, and while I believe I have an idea of how it will all play out, looking forward to seeing the process.

Initial thoughts when putting property under contract were [repair, Rent, DSCR c/o, hold]. We will be taking possession with renters in place that are currently paying $750 a month. The plan is to wait to give them notice until day of closing, as requested by the seller. Rehab timeline less than 1 month after they vacate.

Now considering letting them stay, raising rent to $900/mo, completing minimal repairs as the house is currently in acceptable shape to them & good condition overall, DSCR c/o on a lower ARV. Will need to increase reserves going this route to account for future repairs. This will require less cash invested, shorter time frame to complete, and more cash we take from the deal.

Exit Strategy 1 - Have current Renters vacate, complete SOW, get new renters @ market rent, cash out on max ARV, HOLD.

ARV: 126,000

Acquisition: $60,251+ Closing $925

SOW Budget: $15,750

Rent after Rehab: $1,000

DSCR c/o $100,600 Loan @ 7.5% 30yr LTV80%: $840 PITI + Fees +/- $4000 (2pts+undw/orig/leg)

Cash Flow: $160 before Reserves

Cash Out - Cash In - Fees: $19,674 (100,600-60,251-925-15,750-4000)

Exit Strategy 2 - Have current Renters stay, complete light SOW, raise rent, cash out on lower ARV, HOLD.

ARV: 110,000

Acquisition: $60,251+ Closing $925

SOW Budget: $2,500

Increased Rent: $900

DSCR c/o $88,000 Loan @ 7.5% 30yr LTV80%: $752 PITI + Fees +/- $3800 (pts+undw/orig/leg)

Cash Flow: $148 before Reserves

Cash Out - Cash In - Fees: $20,524 (88,000-60,251-925-2,500-3800)