Including Repair Costs in Bank Loan If Property Appraises for Purchase Price + Rehab
Good morning, BiggerPockets Community.
I am going to buy my dad's house for my first flip. Orignally, I was going to buy the house for $200,000 and use either hard money or a HELOC for the rehab costs. Then I thought I could buy the house from my dad for $300,000, which would include the money needed for the rehab instead of doing 2 separate loans. My dad wants 75k from the deal. This would be conventional financing.
The check for the profit is sent to my dad, he takes his 75k out, and I would like to use that remaining money for the rehab. If the house appraises for at least $300k at the time I purchase it from my dad, is this okay to do then? The money would be in my dad's name though, so I feel like there would problems with this.
So, my question is then is my new plan doable or is there a better strategy? My dad is retired and his credit score isn't the greatest while my credit score really good and debt to income is pretty low right now.
Mortgage Owed: 118,000
Money to Seller: 75,000
Est. Rehab Cost: 100,000
Zillow Est Value: 350, 000 - 412,000
ARV: 450,000