Short sale deal

[Inderpal Chadha]

Hello

I am considering a short sale property (SFH) in the Magnolia area of Seattle (very desired location). The property is valued at $800,000 and is available at $680,000. It does not require more than $5000 in fixes to rent it out. It will rent for $4200. I am considering this as a one year flip. If I put in $30,000 in upgrades, I am sure I will be able to sell it for $825K right away. And if I keep it for a year, considering the location and rising King County market, I should be able to sell it for $900K. I know it does not fall in the traditional rules of renting, but my monthly payment with 20% down will be about $3300 (including taxes and insurance), so I will net about $1000 a month on a cash outlay of $150K and a net about $150K when I sell it after a year. Reason for a year is I can take advantage of 1031 exchange, which I understand is available only if property is held for at least one year and one day. Looking for insight in to this from the pros on BP.

Thanks

Inderpal

[Wayne Brooks]

First, just because it may have an asking price of $680k doesn't mean the bank will accept that number. They'll be looking for something close to FMV. As to the 1031, holding a year and a day doesn't automatically qualify it. The "intent" of purchasing had to be for long term investment, not flip in one year.