We have a situation where my parents & my mom’s three brothers will be inheriting a home in near future.
Knowing that my wife and I are very interested in real estate investing and are trying to get started here in Southern California, they have extended an opportunity for us to provide potential creative options for purchasing the property for a win/win deal situation.
The home is located in a nice area of Orange County, CA. We have not gotten a formal appraisal but guessing the home is valued around the $600-650K price range. The property also needs extensive renovations (approx. $200-250K) to bring the property modern and current to rest of homes in the neighborhood.
My wife and I would love to purchase the home as our new primary residence but are not sure we could pull it off. We currently own our primary residence and have built an equity stake in our property that is of some size but not enough to purchase the property at the above price point with traditional financing and then turn around and invest in the necessary renovations.
Our second option would be then if we cannot purchase the home as our primary residence would be to potentially renovate the property and sell after complete. In this scenario we would propose to them to allow us to renovate the property and sell in 12 months. To fund the renovation we have a HELOC to pull from but it is not enough to cover the entire project. One of my uncles has offered to be flexible with his equity stake in the property, combined with our HELOC this would be enough to renovate the property. Our thoughts would be to work out a deal where we get a portion of the profits from the renovation efforts after the property is sold. Given the potential for high value of the home after sale this could be a sizable profit split. We understand there is a certain risk with this option that would need to be managed carefully.
I have extensive knowledge for home renovation as I work for a general contractor however this would be our first rehab and flip project in quite some time and at this price range.
I am posting this to receive feedback from the BP community as to thoughts for the feasibility of the above plan, suggestion from those that have potentially been through this scenario before, and alternate options that are possible for this type of deal we have not thought of. If more info is needed, I can share.
Appreciate the feedback!