I am ready to pull the trigger on my first deal - nice 3br-1b Cape. Rehab is about 14 days labor estimates my contractor and I'm allowing a month to knock it out pending the usual unforeseen circumstances. Here are my forecast economics - what do you think?
are you using your own cash and have no cost of capital.. if that is the case looks pretty decent
Yes @Jay Hinrichs will be an all cash deal - plan to pay myself interest for the three months just in case the rest of the numbers are off somehow at least I'll make money on what I loan to the business for the deal :)
That looks to be around an 18% cash on cash return, so yes, I would say that's a good deal based on your numbers. Great job, hope it goes well, stick to your guns on the rehab budget though...if this is your first one, its very easy to let rehab get out of control depending on how much you trust your contractor.
Numbers looks good. Hard to find deals like this in WA. Since you won't be using hard money, it will be less risky for you as well. Good luck!
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Originally posted by @Account Closed :
if your flipping this your forgetting about the back end #s .. realtor commission, and seller paid closing costs ... factor those in and your 23k profit shrinks even more. What about property taxes for your hold time? 10% contingency for overages on your budget? I wouldn't do this deal personally, but that's just me
Exactly. Back of napkin numbers he's overpaying on this deal by $10k or so.
The thing that jumps out to me is the 40K Reno budget that will be executed in two weeks. I think it's wise to make this a month (or more) unless your GC is doing these sorts of projects that quickly all the time. If so, gotta love them!
Good luck no let us know how it goes.
The numbers looks like you have a good deal. There is enough wiggle room that you won't lose your shirt.
Is the $160k sale price reasonable? Bangor PA seems to be all over the map. Recently sold home vary from 37k - 250k. I assume the lower price ones are renovation only, but I don't know about the ones starting at 105k. And current 3/1s on sale vary from 600k down to 30k. 160k seems to be slightly higher than average for the area, but that isn't a real scientific number.
What are you doing to make the place worth 160k vs the 145-150k homes?
@Ken Vesely I did include the closing and realtor commissions on the sales side but didn't put a lot of contingency in. I allowed for three months carry and paid myself interest on the money but didn't factor in the taxes (not sure how that will work exactly do they take it at close?)
@Aaron Montague the property is actually in Nazareth and my realtor is pretty confident on the range - we are considering converting one extra family room space into a fourth bedroom that should drive the value up a bit more but it will cost ~5k more on the reno and take an extra week or so. Will rework the numbers and let y'all know how it turns out.
Sounds very difficult to do this $40,000 renovation in 2 weeks. We just closed and we figure our $30,000 renovation will take 2 months. Please give us a progress report on your renovations week by week. We now own our Duplex 5 days and we have not even caught our breath. We are doing demolition today and having the gutters cleanned, thats in 5 days.
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