Great opportunity before all the uncertainty - need help!!

[Cody Strech]

Hey BP experts,

Looking for some guidance as I am a loyal listener and have put my learned knowledge into good use.

I currently house hack in a fourplex and own a single family home in a college town. I have house hacked for a year and a half now in the fourplex and it is currently operating at a 14% cap with owner occupancy.

The single family cash flows $250 per month and my tenant is a professor at the university with great job security. The short term rental market here is amazing (in times other than the coronavirus).

My fiancé and I both have well paying jobs with hers being in healthcare at the university which is totally secure from layoffs.

Before the corona drama started, I was about to make a move on a single family home in our most popular neighborhood in town right across the street from campus. Great for long term rentals, Airbnb, and owner occupancy.

My plan is for my fiancé and I to move into this home once it’s renovated and Airbnb the house for game weekends and large events in town (house hack). Also, we will eventually add a 1200sf garage apartment on the property not attached to the house or current garage for extra cash flow plus the additional three car garage for the structure. We have negotiated a pretty great deal in my opinion but I need some unbiased feedback.

I am going to list the numbers to make it easier to analyze.

3000 sqf single family 4/2 (less than a mile from campus)

Negotiated price: $104/sqf

Avg price per sf in the neighborhood: $190-220/sf

Total renovation budget: $155,000

Expected appraised value after Reno:

$594,000 @ 198/sf

There is a new build home around the corner that is 4000sf and just sold for over $1m.

I have considered flipping the deal after a one year hold if times become difficult to at least break even.

I have a hard money loan set up at 7% to both acquire the property and rehab with interest only. I also spoke to my lender and they are willing to lend up to 80% of the final appraised value which should leave me with little to no money in the deal.

We have cash reserves saved that could float all three properties for at least one year without taking current cash flow and our day jobs into consideration.

I thought about pushing our closing date all the way to August to see where the market is heading. Not sure if the sellers are willing but thought it was worth asking if y’all think it’s a good idea.

I want to move quickly on the negotiated offer but with the uncertainty of the market - what advice would you give in this timing of market volatility and the unknown.

Sorry for the novel and thank you in advance for any and all comments!