Wanna be a surgeon? Dissect this deal with me.
Member since 2024 · 6 posts · 1 vote
Wanna be a surgeon? Dissect this deal with me.
Most Popular Reply
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1yQuote from @Hermes Kanaris:
Hey everyone, im new to this community but always wanted to be in real estate. Last week I acquired my FIRST wholesale deal! I'm looking around to find some investors to take it from me and just feel a little lost with dispo, i want to make my deals super sweet sugar coated cherry on top for all my investors on my list so what i ask is if you can rip apart this deal for me and make sure i have enough meat on the bone for my investors, below are the stats
First off address, 1011 Richard Bell Ave Perry FL
Purchase price $110,000
Seller says the bank is willing to let go of mortgage for $91,000
ARV $180,000-$200,000
Needs new roof (20 years old) and central ac system went down about a year ago (around 4k for 3 ton ac)
Ive been in roofing for about 2 years and im estimating the roof will cost between 18k-20k
I take constructive and negative criticism very well and i only want to improve, no opinions are unwelcome i want full scrutiny with this deal please.
Some additional details needed:
1. How are you financing this? What is the cost of financing. Lets say you needed $100k in financing at 12% + 2 points and it took you a year to rehab and refinance that is an extra $14k + closing costs.
2. you mention roof is 18-20k. That seems like an expensive roof - does it need to be completely torn up and rebuilt to hurricane standards?
3. /Have you been inside the property and walked it to do a full estimate of costs? I can only imagine a home in florida that has not had AC for a year what the interior looks like.
7e investments53 Reviews
14 Replies
- New to Real Estate · Member since 2024 · 43 posts · 22 votes1y
What else is there to do on the house? What’s your total rehab estimate? Is this a $25k, $40, $70k flip?
Can you estimate the holding and transaction costs?
If you can get it at less than 50% of its ARV, you're probably in a decent place to sell it to an investor, but it's hard to say without more insights. - Real Estate Consultant · Columbia, MD · Member since 2017 · 160 posts · 55 votes1y
Congrats on your first deal @Hermes Kanaris!
Let’s break it down with the 70% rule to see if it’s investor-friendly:
ARV: $190,000 (taking the middle of $180K-$200K) 70% of ARV: $190,000 * 0.7 = $133,000
Minus Estimated Repairs:- Roof: $20,000
- AC: $4,000
- Additional repairs (general estimate for a property needing updates, say flooring, paint, minor plumbing): $10,000-$15,000
Total Repairs: approx. $35,000
Max Buy Price for Investor: $133,000 - $35,000 - $10,000 (wholesale fee) = $88,000
Since you’re getting it for $91,000, you’re close, but to make it irresistible, consider negotiating the purchase price down a bit further. This should make it a cherry-on-top deal for investors!
NOTE: Need to Know: Do the kitchen and bathrooms need updating (if yes, that cost needs to be included and your buy price needs to reflect that additional expense) - Member since 2024 · 34 posts · 9 votes1y
@Trevor FinnI would agree with your breakdown, but why overlook a potential to run the 91k subject-to with a targeted 6 month hold for flip or 18 month refinance? Unless the seller has to be immediately out of the mortgage I see sub-to as an excellent cost reduction strategy.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Timothy Franklin:
@Trevor FinnI would agree with your breakdown, but why overlook a potential to run the 91k subject-to with a targeted 6 month hold for flip or 18 month refinance? Unless the seller has to be immediately out of the mortgage I see sub-to as an excellent cost reduction strategy.
just reading between the lines.. but if the bank says they will take 91k for it sounds like the mortgage is in default so a sub to might not be possible. - Member since 2024 · 34 posts · 9 votes1y
Okay @Jay Hinrichs that makes sense to me, I didn't interpret it like that. When I read the bank would accept 91k I understood that to mean that was the 30 day payoff amount on the mortgage.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Timothy Franklin:
Okay @Jay Hinrichs that makes sense to me, I didn't interpret it like that. When I read the bank would accept 91k I understood that to mean that was the 30 day payoff amount on the mortgage.
when the OP said the bank is WILLING to take 91k to me that means or infers a default situation and a discount.. But who knows we both maybe right :) - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Hermes Kanaris:
Hey everyone, im new to this community but always wanted to be in real estate. Last week I acquired my FIRST wholesale deal! I'm looking around to find some investors to take it from me and just feel a little lost with dispo, i want to make my deals super sweet sugar coated cherry on top for all my investors on my list so what i ask is if you can rip apart this deal for me and make sure i have enough meat on the bone for my investors, below are the stats
First off address, 1011 Richard Bell Ave Perry FL
Purchase price $110,000
Seller says the bank is willing to let go of mortgage for $91,000
ARV $180,000-$200,000
Needs new roof (20 years old) and central ac system went down about a year ago (around 4k for 3 ton ac)
Ive been in roofing for about 2 years and im estimating the roof will cost between 18k-20k
I take constructive and negative criticism very well and i only want to improve, no opinions are unwelcome i want full scrutiny with this deal please.
Some additional details needed:
1. How are you financing this? What is the cost of financing. Lets say you needed $100k in financing at 12% + 2 points and it took you a year to rehab and refinance that is an extra $14k + closing costs.
2. you mention roof is 18-20k. That seems like an expensive roof - does it need to be completely torn up and rebuilt to hurricane standards?
3. /Have you been inside the property and walked it to do a full estimate of costs? I can only imagine a home in florida that has not had AC for a year what the interior looks like.
7e investments53 Reviews - Member since 2024 · 5 posts · 2 votes1yThis is a very good point! Make sure you are taking into account closing costs as well as the repair money! Those two alone may run your deal over.
Quote from @Chris Seveney:
Quote from @Hermes Kanaris:
Hey everyone, im new to this community but always wanted to be in real estate. Last week I acquired my FIRST wholesale deal! I'm looking around to find some investors to take it from me and just feel a little lost with dispo, i want to make my deals super sweet sugar coated cherry on top for all my investors on my list so what i ask is if you can rip apart this deal for me and make sure i have enough meat on the bone for my investors, below are the stats
First off address, 1011 Richard Bell Ave Perry FL
Purchase price $110,000
Seller says the bank is willing to let go of mortgage for $91,000
ARV $180,000-$200,000
Needs new roof (20 years old) and central ac system went down about a year ago (around 4k for 3 ton ac)
Ive been in roofing for about 2 years and im estimating the roof will cost between 18k-20k
I take constructive and negative criticism very well and i only want to improve, no opinions are unwelcome i want full scrutiny with this deal please.
Some additional details needed:
1. How are you financing this? What is the cost of financing. Lets say you needed $100k in financing at 12% + 2 points and it took you a year to rehab and refinance that is an extra $14k + closing costs.
2. you mention roof is 18-20k. That seems like an expensive roof - does it need to be completely torn up and rebuilt to hurricane standards?
3. /Have you been inside the property and walked it to do a full estimate of costs? I can only imagine a home in florida that has not had AC for a year what the interior looks like.
- 1yZachary DealPro MemberLender · Member since 2023 · 464 posts · 425 votes
@Trevor Finn Great analysis! The only thing that I see missing if they are purchasing with hard money debt they may want to factor in 3% - 5% for closing costs (points, fees, title, etc)
- Member since 2024 · 6 posts · 1 vote1y
I appreciate all the replys guys, everything i read on here is so helpful since im new to this business. A little update with the bank, they are now telling me that they aren't even going to consider a settlement or a short sale unless the past due 14 contractual payments (around 8-10k) are paid. EVEN IF THEY ARE PAID they cant guarantee that a short sale will even be approved AND cant guarantee any price. I asked them, what do you usually short sale properties at %? they said around 90% of market value.
I tried to get them to understand that this property needs a LOT of work, almost a full gut, some holes in walls (small) old carpet needs to be ripped up, i mean like the works on this thing, you can prob get away with touching up the kitchen since its real hardwood and the bathrooms as well but this prop needs at least 80k.
Found out owner actually owes 140k on property, and zillow is zestimating it to be 127k. Im not really sure how to save this deal... I don't even think its worth a sub-to
- 1yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Hermes Kanaris:
I appreciate all the replys guys, everything i read on here is so helpful since im new to this business. A little update with the bank, they are now telling me that they aren't even going to consider a settlement or a short sale unless the past due 14 contractual payments (around 8-10k) are paid. EVEN IF THEY ARE PAID they cant guarantee that a short sale will even be approved AND cant guarantee any price. I asked them, what do you usually short sale properties at %? they said around 90% of market value.
I tried to get them to understand that this property needs a LOT of work, almost a full gut, some holes in walls (small) old carpet needs to be ripped up, i mean like the works on this thing, you can prob get away with touching up the kitchen since its real hardwood and the bathrooms as well but this prop needs at least 80k.
Found out owner actually owes 140k on property, and zillow is zestimating it to be 127k. Im not really sure how to save this deal... I don't even think its worth a sub-to
Always make a market. Put all your estimations of it, discount the cost of capital, time and add a 33% buffer to it and show it. If they take it, nice. If they don't, oh well. They might run another one by you later that you are able to make work. I always feel it's important to show a market on something you're willing to own for a long time.
- Real Estate Consultant · Columbia, MD · Member since 2017 · 160 posts · 55 votes1y
Quote from @Zachary Deal:
@Trevor Finn Great analysis! The only thing that I see missing if they are purchasing with hard money debt they may want to factor in 3% - 5% for closing costs (points, fees, title, etc)
Thx Zachary! That is a good point for them to factor in, nice one!
- 1yAndy SabischPro MemberInvestor · Jackson, MS · Member since 2021 · 657 posts · 559 votes
Quote from @Hermes Kanaris:
I appreciate all the replys guys, everything i read on here is so helpful since im new to this business. A little update with the bank, they are now telling me that they aren't even going to consider a settlement or a short sale unless the past due 14 contractual payments (around 8-10k) are paid. EVEN IF THEY ARE PAID they cant guarantee that a short sale will even be approved AND cant guarantee any price. I asked them, what do you usually short sale properties at %? they said around 90% of market value.
I tried to get them to understand that this property needs a LOT of work, almost a full gut, some holes in walls (small) old carpet needs to be ripped up, i mean like the works on this thing, you can prob get away with touching up the kitchen since its real hardwood and the bathrooms as well but this prop needs at least 80k.
Found out owner actually owes 140k on property, and zillow is zestimating it to be 127k. Im not really sure how to save this deal... I don't even think its worth a sub-to
We had a similar deal last summer that looked like it was on a glide path to closing and then the REAL numbers came to light and the wheels fell off the bus. If the numbers do not work, be very careful about trying to MAKE them work by taking a little from here and a little from there. If you are getting what you are from the bank, you need to step back and assess the deal. Walking away is better than proceeding and finding yourself upside down and owing money . . . there are always more deals. Your numbers are close and assume no more work is needed than the big ticket items you mentioned. Have you been inside? Are the rest of the repairs cosmetic or structural? If you need to have a contractor walk it down, go that route. Working with a bank on a short sale is not as simple as it might seem - most have never seen the property and are looking at spreadsheets alone. The one we walked away from needed a roof (and more) and was leaking inside the property - bank could not have cared less. Good luck on the deal but make sure you know ALL of the costs before you lock it in as it can easily make a great deal look 180 degrees differently. - Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 632 votes1y
Quote from @Hermes Kanaris:
I appreciate all the replys guys, everything i read on here is so helpful since im new to this business. A little update with the bank, they are now telling me that they aren't even going to consider a settlement or a short sale unless the past due 14 contractual payments (around 8-10k) are paid. EVEN IF THEY ARE PAID they cant guarantee that a short sale will even be approved AND cant guarantee any price. I asked them, what do you usually short sale properties at %? they said around 90% of market value.
I tried to get them to understand that this property needs a LOT of work, almost a full gut, some holes in walls (small) old carpet needs to be ripped up, i mean like the works on this thing, you can prob get away with touching up the kitchen since its real hardwood and the bathrooms as well but this prop needs at least 80k.
Found out owner actually owes 140k on property, and zillow is zestimating it to be 127k. Im not really sure how to save this deal... I don't even think its worth a sub-to
Sounds like you spoke to collections (who will tell you anything to get money) and not loss mitigation, as paying back due balances are NEVER part of a short sale. In fact being current on payments is the biggest challenge to getting a short sale approved.
Either way if the balance is 140k, without going through the short sale process (which will take a few months) no one can assure you of any approved sale price. As part of the short sale process, the lender will have an appraisal/BPO of the property to determine its current fair market value. The lender will be looking for close to that amount.
This is not a sub to deal at all. Move on if that is your strategy.
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