Nashville, TN · Member since 2016 · 65 posts · 18 votes
Ok, i just agreed on my first deal. Now I need financing. I need a total of 90k. Purchase price is 55k. Rehab is 20k. Other realtor n orher expenses is 11k to 15k. ARV is 115k.
This is my first deal, any suggestion. I am really looking for private investor bc i am finding that even hard money lenders want you to have some experience.
I work as a structural engineer and my business partner does construction management, so we are very knowledgable about the building industry.
-35,000 rehab (being that it's your first, you are going to be wrong here)
-9,200 for closing on the sell
-5,000 (hard money or private money)
- 1,000 (insurance, utilities, taxes)
= 8,300 profit
Doesn't sound like a very good deal. Even if your rehab number is correct, you make 23,300. A lot of work for 23k. AND we are working on the assumption that your 115 number is correct and it won't get beaten down
I would keep this thing as a rental. 55k purchase, probably doesn't need much to rent, rent it for 1,000 a month? I would take that deal
-35,000 rehab (being that it's your first, you are going to be wrong here)
-9,200 for closing on the sell
-5,000 (hard money or private money)
- 1,000 (insurance, utilities, taxes)
= 8,300 profit
Doesn't sound like a very good deal. Even if your rehab number is correct, you make 23,300. A lot of work for 23k. AND we are working on the assumption that your 115 number is correct and it won't get beaten down
I would keep this thing as a rental. 55k purchase, probably doesn't need much to rent, rent it for 1,000 a month? I would take that deal
Realtor · Hermitage, TN · Member since 2014 · 125 posts · 93 votes
10y
@Devan Mcclish makes a very good point. At the very least get solid bids for what you think needs to be done before you make a final decision. If you can get $1000 per month it should cash flow nicely, then in a couple years you can rehab and sell for $150k (maybe more) then you will have a safer margin.
You said your partner is a construction manager, do they have experience with rehabs? If not, the other option would be to partner with a rehabber.
Nashville, TN · Member since 2016 · 65 posts · 18 votes
10y
yes my partner has experience with rehabbs.. @Devan Mcclish @roger poulin... 20k is what we are aiming to make for the deal. We are not in the position to have rentals backs we need active income...
Silver Spring, MD · Member since 2016 · 48 posts · 14 votes
10y
Comps make a world of difference. If she says it can sell at the top of the market for $130k then her profit margin is around $38-$40k. It will depend on what she and her partner can sell the home for. She may not be a fan of the brrr strategy and her profit margin goals may be be different.
Good luck @Dominique Jones either way! Let us know how the deal works out.