Help me analyze this flip or brrrr deal in Baltimore
I'm pretty much a newbie at this, and so just playing around with numbers as an exercise. Here's how I approached it:
Searching on CL and Zillow got me to this SFH in the Hampden neighborhood of Baltimore (hipster/very desirable, lots of cute restaurants, shops, Whole Foods, etc.). What's more, it's on the "Miracle on 34th Street". It's listed as 4 bedroom 1.5 bath, 1480 sf, and the pictures show a house that definitely needs paint, floors refinished at least, a full kitchen and bathroom rehab, and I'd assume you'd want to make the half-bath a full bath for value.
Here's the link on Zillow: http://u.zillow.com/p2T5Pj/
But the price is listed as $145k on Craigslist and on this site: http://realpropertyinvestorsmd.com/baltimore-city-...
However, I don't really believe the numbers that "Real Property Investors MD" cite. They estimate a renovation cost of $45k and say that it has an ARV of $289k.
Here's why I don't believe it:
1) Renos cost a lot. Let's assume kitchen minimum $20k, bathrooms minimum $15k, add at least $10k for walls, floors, miscellaneous, maybe add a parking pad (area doesn't have garages) and that's assuming no major structural issues. I'd assume at least $50-60k to be safe.
2) Comp on the same street that appears to be under contract for $259.9k- but slightly larger at 1900 sf, 2.5 baths, fully renovated: http://u.zillow.com/p2T5Pn/
3) General Zillow #s for Hampden are more like $220k, not close to $300k. (Note: I know that Zillow isn't the be-all-end-all, but it's what I have easy access to right now).
Ok - so is this a good deal?
As a flip:
Used the BP calculator assuming an ARV of $250k, wanting a $25k profit and rehab costs of $60k - in that case, maximum allowable offer of $132,900.
As a BRRRR:
Used the BP calculator, not sure if I did this correctly, but the general guidelines were that rents in the area (it's a very desirable area) are around $1500. The calculator tells me that theres no cash flow in Y1 with the same rehab budget as in my flip scenario, but that Y2 and beyond would deliver a 20% cash-on-cash ROI, again assuming I could refinance to 70% of the ARV. In this scenario I assumed I would have to pay $145k.
What does the community think? I'd appreciate any thoughts, especially about my assumptions and process for thinking about this deal. This is really just an exercise for me as I'm exploring neighborhoods and potential strategies in Baltimore.