So, I have been flipping for several years now, but the MLS has dried up over here and tried some yellow letters. The phone is ringing and found a potential deal. What would you do? Here are the specs.
$15,000 Closing, New Roof, Chimney, and Appliances
After these repairs the property would be worth $70,000 - $75,000 or could get rent for $850 / mo.
Is there a deal? What would you do?
Yes there is a deal here. If you buy it and can be all in for around $58-$60k, you should be able to sell it minimum $70k. Get it rented asap as if you can bring that rent you will get cash flow till sold.
@Curt Davis I just didn't know if it was worth the $3,000 profit after paying for closing and Realtor fees.
If you plan on reselling this property and not keeping it, it sounds like your profit will be $3000 on a property that has a $70,000 ARV. That means your profit is a little over 4% of the ARV.
Like J Scott mentions in one of his podcasts and I agree with him, I shoot for a minimum profit of 15% of the ARV, and that's a minimum. By no means is 15% a home run, but still a decent profit.
So if it were me I would definitely try to negotiate the purchase price on this one.
I was assuming there would be no realtors involved and your closing cost would be around $700.
To me it seems like a lot of risk for just $3000 in the end to do a flip. It may have some potential as a Rental as a quick 50% analysis appears to show that the property will cashflow with some money put in. If you were to purchase for a long term cashflow would you spend as much on the renovation as a flip? Generally the renovation to make ready for rent is less than that to sell.
The major conflict is that I would need to spend nearly $13,000 instantly to resolve the roof leaking and falling chimney. Other than that, Everything in the house is ready to go. I would do a quick paint job on some rooms to give it a better first appearance and refinish the hardwood floors.
I would love to not use a realtor, but that would add more holding costs and unfortunately it is a two story, historic home.
So to get it rent worthy I would need to drop about $15,000. To get it flip worthy, I would need to allocate a total of $20,000 and that is slim for holding costs.
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