Should I BRRRR, Finance Traditionally, or List as Agent?

[Kyler Ng]

Hello! I’m looking for some recommendations on an opportunity I have. Here’s the details:

Potential Purchase Price: $95k

Estimated Rehab: $10-15k

ARV: $135k

Current Rent: $800 - well below market. Could be increased to $1,000 - $1,100

Tenant has been in place for years and is on a fixed income from the military with no issues or plans to leave.

If I were to purchase, I would want to leave a minimal amount of cash in the deal. The options I see here are:

1) BRRRR: Even without doing any rehab, this property would likely appraise for around $115k or more. So use private money for purchase, slowly increase rents with current tenant in place, then refi without doing any rehab until tenant decides to move.

2) Finance Traditionally: Borrow down payment from private lender, finance the rest with a lender. This would likely make the numbers tight for cash flow until the private money was paid back, but would have a higher cash flow thereafter.

3) List as Agent: I’m also a real estate agent, and the seller would be open to listing the property with me. Do I take the simplest route here and earn my commission and move on?

Any feedback on these thoughts is appreciated. I’m also open to any and all other suggestions that you might have! Thanks!

[Paul Welden]

if you would owner occupy it, do an FHA 203k.

if you would not owner occupy it, do a Fannie Mae Homestyle or Freddie Mac CHOICERenovation. 

Any of these options would allow you to include the purchase price + renovation costs into 1 loan and then create extra equity/value out of it based on the improvements you would do. 

Then continue with the rest of the BRRRR steps.