Thoughts on this potential investment ?

[Bryce Kephart]

North Dakota ! 

🔑 Project Summary:

• Purchase Price: $220,000
• Repair Costs: $26,000
• Other Costs/Fees (inspection, mortgage, doc prep, wire): $1,150
• Annual Insurance: $1,200
• Closing Costs (sale): $5,000
• Total Net Cost (including interest): $222,350
• Total Cost After Repairs: $248,350
• Sale Price (After Renovation): $390,000
• Net Profit: $136,650
• Return on Investment (ROI): 55.02%

💰 How the Investor Makes Money:

1. Buy Low, Sell High (Equity Gain)

• The home is bought for $220,000 and fixed up with an additional $26,000.
• The post-repair value (ARV) is estimated at $390,000.
• This creates a value spread of:
  • $390,000 (sale) - $248,350 (total cost) = $141,650 gross profit

2. Leverage & Financing

• If the investor uses financing, they can leverage other people’s money (OPM) and potentially reduce cash out-of-pocket. This increases the ROI even further.
• Even with cash purchase, a 55.02% return on $248,350 is exceptional for a short-term project (usually under 12 months).

3. Quick Turnaround (Time vs. Return)

• Unlike rentals that yield slow returns over years, this is a short-term flip.
• The annualized return (if completed in under 12 months) is 55.02%, which beats stock market averages or typical rental yields.

4. Minimal Holding Costs

• Only $1,200 annual insurance and no mention of taxes/utilities being major costs.
• Assuming quick turnover, holding costs are very low, preserving profit.

5. Strong Market Potential

• With an after-repair value of $390,000 in a lower-cost housing market, the property is likely positioned well to sell fast — possibly even to a cash buyer or with conventional lending.
• There's potential to sell above asking if improvements increase desirability and competition.

📊 Return Breakdown:

Item	Amount
Purchase Price	$220,000
Total Costs (Repairs + Fees)	$28,350
Total Investment	$248,350
Sale Price (After Repairs)	$390,000
Gross Profit	$141,650
Closing Costs (Sale)	$5,000
Net Profit	$136,650
Return on Investment	55.02%

📈 Exit Strategy: Fix & Flip

• The strategy here is clearly fix & flip, not a long-term rental.
• Fast return of capital with high ROI makes it appealing to investors who want quick liquidity and scalable profit potential.
• Repeatable model: If this same model is repeated 2-3 times per year, the investor could see $300K+ annual incomefrom similar deals.

✅ Why It Works:

• Strong margin between cost and resale value.
• Efficient repairs that don’t overrun budget.
• Well-priced acquisition.
• Tight control on costs and minimal carrying risk.

🧠 Optional Enhancements:

If the investor wants to increase profit even more:

• Use hard money lending to reduce upfront capital outlay.
• Sell off-market or FSBO to reduce realtor commissions.
• Add value-enhancing features (e.g., energy-efficient upgrades, curb appeal).