Trying to make the best decision on a home run deal

[Colin Merrill]

Looking for some opinions about what you would do if you were in my shoes.  Here's a little bit of info about me:

25 years old with 21 doors, a live in flip, and 2 other flips going with a partner with no debt.  Base income from a 20 hr per week job of 25k per year.  $50k last year from rentals, 67k from flips.  I'm currently burning about $50-55k per year to take care of my family.  My short term goal is to leave my highly stressful inner city Property Management Maintenance job.  My long term goal is to take my net worth from 1-10m as quickly as possible.  I am closing on 4 deals this month, one a hotail, one flip, one 6 family hold, and lastly this deal that I'm not sure what to do with.

The property: 1319 Michigan Ave South Milwaukee Wisconsin

Purchase Price: $14500 + CC of $1000

Rehab: $45000 or less

ARV: $150k

Potential Capital Gain: $82500.00

Rent Potential: $1400-1500

Taxes (assessment $41k) $1200 which after reassessment will most likely be closer to $3000

Tenants will pay all utilities and water bill.

Maintenance/Capex/Self Mgmt: $400

I will have this property paid off free and clear currently and can most likely pull off the rehab without drawing to much from my line of credit. The way I'm thinking is that at my 32% tax bracket flipping this house will be fairly painful tax wise whereas if I put some debt on it and held it for a year then I could 1031 out of it. I can get a bank to lend me 75% of ARV right now for 5.25 on a 5/1 arm on a 25 am.

On the one hand I think about just keeping it paid off and having a nice cashflow source to help me leave my job but I also want to have a significantly higher net worth than where I'm at now and I believe that the way to do that is trading up to larger projects or venturing into a non rei based business with my partner.

What would you do in my shoes?

[Jordan P.]

You mention that your current job is highly stressful. If you use this property as cashflow and leave your job sooner, what could you do with way less stress to deal with? Would it let you spend more time looking for more home run deals? Would you be able to spend more time with your family? These are just some factors to think about. You could always 1031 it into a larger project that also cashflows well somewhere down the road