ARV 218K , Purchase price 100k, under contract but HAVE NO $$$

7 Replies

I just got 3201 45th st, Lubbock, TX 79413 under contract, the original asking price was $140k, I got it for $100k. I have a 10 inspection period and 30 days to close after and only put down $50.00. It needs 45k in renovations.

I have a contractor and the ARV is $218k -$250k

How do I fund this flip?

I think you have a few options. First, let me give you my two cents. I haven't seen the property in person, but I know the area pretty well. I am assuming that the property is 2193 sq ft with a converted garage with 540 sq ft, for a total of 2733 sq ft. Please correct me if i'm wrong. I briefly looked over some comps and looked at the numbers keeping the garage conversion or converting it back to a garage. You're going to have a hard time selling a home over $200,000 in Lubbock, TX that doesn't have a garage. I have the ARV around $205,000-$218,000. Just because the property will appraise for that doesn't mean that someone will be interested in paying that much for it either. I had a previous client purchase a home a few blocks away. The house was larger, for the most part fully updated, and had a three car garage. He paid $185,000. That's just something to keep in mind.

I still think you have a good deal here though.  You could potentially wholesale it and make a quick $5,000.  That would be the conservative and stress free approach (maybe). You could also look for a partner, like myself, that has the funds and financing readily available.  Another route may be to utilize a hard money lender.  There are several in town, but if you have no money AND no experience that might be tough.  I hope it works out for you!  No matter what you end up doing, I would get an inspection done while you still have an option period.  That would make it much easier to wholesale quickly if the inspection doesn't go terrible, and it will help reveal any issues you need to address if you are the one who purchases it, or reveal something that changes your mind about purchasing it in the first place.  Good luck! 

Originally posted by @Jordan Sutherland :

I think you have a few options. First, let me give you my two cents. I haven't seen the property in person, but I know the area pretty well. I am assuming that the property is 2193 sq ft with a converted garage with 540 sq ft, for a total of 2733 sq ft. Please correct me if i'm wrong. I briefly looked over some comps and looked at the numbers keeping the garage conversion or converting it back to a garage. You're going to have a hard time selling a home over $200,000 in Lubbock, TX that doesn't have a garage. I have the ARV around $205,000-$218,000. Just because the property will appraise for that doesn't mean that someone will be interested in paying that much for it either. I had a previous client purchase a home a few blocks away. The house was larger, for the most part fully updated, and had a three car garage. He paid $185,000. That's just something to keep in mind.

I still think you have a good deal here though.  You could potentially wholesale it and make a quick $5,000.  That would be the conservative and stress free approach (maybe). You could also look for a partner, like myself, that has the funds and financing readily available.  Another route may be to utilize a hard money lender.  There are several in town, but if you have no money AND no experience that might be tough.  I hope it works out for you!  No matter what you end up doing, I would get an inspection done while you still have an option period.  That would make it much easier to wholesale quickly if the inspection doesn't go terrible, and it will help reveal any issues you need to address if you are the one who purchases it, or reveal something that changes your mind about purchasing it in the first place.  Good luck! 

ya we got schooled in Texas appraised values and what someone will actually pay is very many times not close to the same.. its not like our area on the west coast were if a house is worth 210k It sells for that.. of course in the major metro area we don't have any homes that are livable that cheap.. but you get my point.. also when flipping these are almost all FHA buyes at those price points and yoru going to have to give substantial seller credits and in our experience what we went into contract for and what the appraisal came in at was ALWAYS 5 to 10% less it was frustrating.. its certainly a locals market for sure in my mind.

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I’m going to have to agree with Jordan on all fronts. Personally, I don’t see a house in that neighborhood selling for over $200k, especially without a usable garage. Seems you need to be in the newer parts of town to get that kind of value.

I’d be wary, I didn’t get a great look on my way by, but I could see the renovations going over $45k pretty easily. Seems like the house has been neglected for a while and that’s never a good sign.

I'm curious how you put a house under contract through a realtor without proof of funds or preapproval? I don't buy in Lubbock but in other markets in Texas this is impossible. 

@Jay Hinrichs

Thank you very much for the advice. What is your criteria? You said you partner up as well.

I started getting into REI because I kept running into distressed properties when I would inspect for the Insurance companies.

I could definitely let you know if I come across a property that meets your standards.

Thank you

Very Respectfully

Wes

Originally posted by @Wes Barnes :

@Jay Hinrichs

Thank you very much for the advice. What is your criteria? You said you partner up as well.

I started getting into REI because I kept running into distressed properties when I would inspect for the Insurance companies.

I could definitely let you know if I come across a property that meets your standards.

Thank you

Very Respectfully

Wes

my criteria is to skip Texas in the fix and flip business.. we just did not do well there..  and property tax's are out of sight foundation issue are real.. just eaiser places for us to navigate etc.