I am in the process of trying to find my first property to buy for a fix and flip. But, I am having some issues with trying to figure out the numbers. I will be using a HML for this deal and was wondering if someone could look at the numbers.
Property: This is a typical property that I get sent.
Purchase price: 98,000
I would be paying the closing costs for myself and the seller since this would be coming from a wholesaler: $5,000
9.99% w/ 4 points
Realtor fees when I sell: 5%
I would appreciate it if someone could run some numbers given the figures above and let me know what you come up with. Assume a 3 month turn around from buy to sell. Also, assume all of your standard costs associated with buying, rehabbing and selling a property.
break even, maybe. Don't count on 90 days from closing to closing.
Here are the numbers you need to determine what your profit would be on this deal:
- Purchase Price
- Rehab Costs
- Fixed Costs
You have the first three of those -- Purchase ($98K), ARV ($154K), Rehab ($26K). Now you just need to determine your fixed costs.
Here is more information about what this will include:
Let's say you determine your fixed costs to be $20K, then your profit would be:
Profit = ARV - Purchase - Rehab - Fixed
Profit = $154K - $98K - $26K - $20K
Profit = $10K
If you've like to define your own profit target, rearrange the formula and then you can let your other numbers determine your maximum purchase price. For example, if you wanted to make $25K profit on the deal, you can rearrange the formula:
Purchase = ARV - Rehab - Fixed - Profit
Purchase = $154K - $26K - $20K - $25K
Purchase = $83K
You could pay at most $83K to make your $25K profit (assuming your other numbers are accurate).
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