3/1 SFH rental numbers

[Adrien C.]

I have a purchase agrement on a 3/1 in a B+ neighborhood. I can flip it to an investor and make a quick buck or I can fund through a private investor and hold it as a rental. If I do this, I will start marketing it as a rent to own.

The investor would pay $50K and wants 10%. The house is worth $85K. There is no other note on the property. If I rent it out, I'll throw in $2k of basic updates as it has new carpet and hvac/h2o systems. If I do rent to own, I'll market it for $70K and they can earn the equity by finishing the updates them self. Rents are $1000. So after calculating in maintenance, vacancy, CapEx, management, etc, there is very little cashflow for me (like $50/month). If I paid for it myself, I wouldn't do it for this low cashflow. However, because of the equity, I think it might be worth it. I don't have time on this property to get a bank loan as she needs the cash ASAP. My thoughts are to refinance in a year at a lower rate.

Would you do this for little cashflow (yet banking $280/month for the anticipated expenses) because of the equity?

Also, when you are getting private money, what is a typical interest rate you offer? I'm looking to expand my private money lenders with friends/family/past business clients and want to make it worth it for them and myself at the same time.

Thanks