Question on my potential flip in Chicago suburb

[James Bitakis]

I am looking to buy a 4/2 SFH in a Chicago suburb. It is in a western suburb in Dupage County. Nice middle class area. The home is 1336 sq ft. with a 1 car attached garage on a slab. It needs complete rehab plus I'd do new siding and roof.

Price: 130K  

ARV: 190-210K (low estimate). Is this too small of a margin for a first timer? I would be acting as the GC supervising the work. I'd only do some of the smaller things (paint, demolishing, cleaning only) as I'm not that handy.

James

[Kenneth Garrett]

@James Bitakis

The number looks tight.  Let’s look at what you need to cover.

ARV 190K

Rehab - Estimate      40K

Cost of Money             6K                      at 6 months                                      1K/month - estimate

Property Taxes         2500                               6 months

Utilities                         900

Insurance                     600

Profit                             30K

Real Estate 9500 Commission 5% at ARV

Closing Cost                3800                                2% - estimate                                       for sale

Maximum Offer        96,700

You will have closing cost on the buy side which will be small - you will also receive prorated taxes but that will go back when you sell. For a 30,000 profit you need to buy at 96,700. Today's market pretty tough to buy under 100K. If ARV is 210K then you can add 20K back in 116,700. I would rather be conservative.

Good Luck.