How much profit am I really making?

5 Replies

Hello BP family,

I'm a real estate wholesaler and I might be venturing into a rehab project with my friend.

I've found a pretty good property in a nice area in NJ, the details are as followed;

ARV $280K

Purchase Price $140k

Repairs $30k

Annually Tax $7k

Closing Cost $3k

Profit $90k - $100k??

Does my profit sound ok or am I out of my mind?

Am I leaving something out?

Will I get heavily taxed on my profits?

I need help because I using my friend's money!

Thank you,

Neil

Holding costs $8-900/mo. (Taxes, utilities, insurance). Financing costs? Sales costs will be 8-10% assuming you use a realtor, closing costs, etc. Your ARV may not be the same as your actual sales price, plus of course repairs could run over. You'll pay ordinary income tax along with SS/Med tax on the profits.

Originally posted by @Wayne Brooks :

Holding costs $8-900/mo. (Taxes, utilities, insurance). Financing costs? Sales costs will be 8-10% assuming you use a realtor, closing costs, etc. Your ARV may not be the same as your actual sales price, plus of course repairs could run over. You'll pay ordinary income tax along with SS/Med tax on the profits.

Hello Wayne,

Ok, the holding cost seams dead on. No financing cost because my is pretty wealthy and Its a true cash deal. I've cam up with a $280k ARV because to properties on the street and block sold 7 months ago for just of $300K same style, rooms and similar sqft, only major difference is the house I might be possibly rehabbing has only 1 bathroom and the rest that sold for just over 300k has 2 bathrooms. Thanks a lot for your input!

friend* seems* two*

Add the 2nd bathroom,  1 bath in a 3 bedroom is not desirable.

Originally posted by @Wayne Brooks :

Add the 2nd bathroom,  1 bath in a 3 bedroom is not desirable.

 Ok, will do. Thanks a lot for the advice.

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