South Bend Equity Partner Needed

[Stephen Sokolow]

I am looking for an equity partner for a rehab flip deal here in South Bend. I have over 15 years experience in both commercial and residential real estate. I am an active Broker here in South Bend and consider myself to be a market expert. I have recently located a home that I would like to flip. The numbers look like this:

PP: $55,000

Rehab: $30,000

ARV: $112,000

I am seeking a partner that would like to invest in this deal with me. I am offering a 10% return on investment. Depending on your experience I would consider a fair split of the profit. Please contact me for more information. 

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[Thomas Franklin]

@Stephen Sokolow please do not take offense, to the following. In my opinion and given experience, this is not a deal. The numbers you provided leaves a projected profit of $27,000. What about Holding Costs (factor six months of utilities, Property Insurance, and Property Taxes, etc.)? What about the 7-10% Backend Closing Costs (typically 6% of ARV for Realtor Fees, but since you are a Realtor you may not charge your 3% and typically 4% of ARV for Title Company Fees to close). Let's assume you do not accept a Realtor Commission. If I take 7% of the ARV ($112,000), for Backend Closing Costs, this yields $7,840. Using your numbers and subtracting Backend Closing Costs from the Projected Profit ($27,000 - $7,840) yields $19,160. I have not even subtracted six months of Holding Costs. How is this a deal? The moral of what I have written is not accounting for Holding Costs, Backend Closing Costs, and other costs destroys what appears to be a reasonable profit margin.

I would be interested in partnering, on future projects, where the numbers are more sensible, but not on this project. I use a completely different formula, for determining my MAO that accounts for 99.99% of all expenses. I hope my basic number crunching and numerical analysis provided some useful insight.