Live in Flip - Looking for Advice

[William Sullivan]

Hi All,

I'm interested in purchasing a property in Tolland County, CT.  It's a 1070 sq.ft. 2-story home (photos attached).

All utilities are functional and city municipal: electric, water, sewer, and gas heat.

Here's my cost analysis / scope of work:  https://docs.google.com/spread...

Acquisition:  -$33k

Rehab:  -$44.8k

Closing:  -$1.4k

Holding:  -$4.4k

Sale:  -$10.5k

Total Cost:  -$94k

All-In Cash Cost:  -$83.6k (does not include sale costs deducted from proceeds)

ARV: $115k

Profit:  $21k

All-In Cash Cost / ARV: 72.3% (just above the 70% rule, but I'm also living here)

My first first goal is to find a new place to live.  I'd be moving in and doing most of the work myself (as broken down in the spreadsheet above).  I understand it's not a long-term, scalable strategy, and I'll essentially be making close to $20 / hr... but my hope is that the experience will be worth the opportunity cost.  I'm a software developer by day, and I'm looking forward to physical labor.

I'd prefer to target higher value deals with larger upside and lower cost / sq.ft. but the barrier to entry is pushing me back down. I've considered hard-money for a larger deal, but doing cash for the first deal feels more my pace. I've also considered 203k / FHA, but because I've been contracting less than 2 years, I need to wait until next year.

I'm planning to sell, but I was considering renting as a secondary exit strategy. At that point, I should qualify for conventional loan products. At $1.1k / mo rent, 50% of which go to expenses, I'm left with $550 / mo before PITI. Assuming a cash-out refinance at 70% LTV, I'll pull out $80.5k, which is most of my initial investment. Then, with a 3.5% 30-year note, I'm looking at $362 Monthly PI, $235 Monthly Tax, and $125 Monthly Insurance. This means I'd be operating at a loss of $172 / mo. So, I'm not planning to pursue this exit strategy.

Just looking for general opinions on this project proposal.

Thank You!

[Renee Moomey]

@William Sullivan. If you come out ahead on your first deal, no matter how much ahead, that's a success. According to BP, many people are looking for that 20k ahead to even consider the deal because there are so many ways that can be eaten up. What's the backup plan if market value isn't high enough? Are you ok staying there longer? This would lower the risk as well and get you the experience you need.