Need Advice on Fix & Flip Project in West Palm Beach

[Shayan Sameer]

Hi BP Team,

Hope you’re all doing well!

I wanted to get your advice on a fix-and-flip project I’m considering in the West Palm Beach area. The property was listed as a probate, so I had to go through my agent. It was originally listed at $599K, but I was able to negotiate it down to $495K.

I connected with my GC, shared the pictures, and he estimates the rehab costs to be around $80-85K. Based on my analysis, the ARV looks to be in the $720-740K range, and after running the numbers, I anticipate a profit of about $40K including all the junk fees and agent fees.

A couple of things I’d love your input on:

1. Do you think it’s worth getting another quote from a different GC?
2. Would a DSCR loan be a better option than a hard money loan for this project?
3. Do you think this is a deal I should consider?  It's not a 70% rule deal.  

Appreciate any insights you can share. Looking forward to your thoughts!

[Mike Terry]

One of the things I learned early is that the margins on a deal need to be substantial. The larger the purchase price the greater the spread you need between purchase price plus holding costs plus rehab cost and ARV. 40k projected profit on a 600k project is too skinny for me. If things go sideways, you discovery greater rehab expenses, the market takes a turn for the worse, you can get in the red quickly. I am a firm believer in smaller projects with a bigger spread. The first few flips I undertook, although marginally profitable I would not touch now.