That time you made 2,000% on your money
So I have to share this deal I just did with you... Conservative estimates before receiving a bid from a contractor, inspection report or appraisal:
- $16k cash out of pocket
- $80k purchase price
- $160k ARV
- $45k rehab (Houston flood house)
- 30% cash on cash return ($415/mo net cash flow)
- 159% return on equity ($26k equity)
My contractor went out and estimated $50k, which means my cash out of pocket goes up ~$5k, but i'm still pretty happy with the numbers. Inspection comes back with a few minor items I hadn't considered. I worked with my contractor to fit the items in, keeping the total at $50k.
My lender calls me, telling me he has some good news. The hard money appraisal comes back $18k above my ARV! My new numbers are as follows:
- $2.2k cash out of pocket
- $80k purchase price
- $178k ARV
- $50k rehab (Houston flood house)
- 226% cash on cash return ($415/mo net cash flow)
- 1,772% return on equity ($39k equity)
I previously wrote a check for $2.5k earnest money, so at closing I received cash back of $250. My single-year ROI is nearly 2000%!! I'm tempted to cut my rehab by $2.2k or more so I can claim an infinite return or that I got paid to take the house :) All I can say is real estate is awesome.