Just put this house under contract, am im missing anything?

Question

Hi

http://www.zillow.com/homedetails/114-Baxter-St-Va...

My husband and i put an offer on this house, after negotiation it was accepted for 242k

We are using a hard money  lender to finance everything. 3 %  at closing and 11% annually. We are using a duplex in oakland we have as a collateral.

Anyone knows a good honest contractor in vallejo, ca? still need to figure out the rehab costs.

Meeting with an inspector tomorrow morning.

Got 6 days to close.

similar comps are at about 340 k. but after lender fees, rehab fees and agent fees we are not left with much.

Any creative idea , anyone out there? looks like a solid house in a nice area. we have been to the house  twice so far.

it will be a great air b and b property as it is 25 min from napa - where air b and b is not allowed.

we wont be able to hold the house due to debt income ratio that will prevent us to hold it long term.

Input anyone?

Will highly appreciate it

Noa Bloch

Kirk Sinan · Answer

Hi,

I'm a new BP member and also a beginner investor. I've purchased a single family home in 2004 and a Triplex in 2006. The triplex was a bad investment. Because of timing and other bad decisions I made we lost the triplex. That being said I'm a GC out of Napa Ca. That would love to work with investors to further my real estate education. I would love to speak with you about your property.

Bill Hinshaw · Answer

First of all - congrats on taking action. Most people don't. However, you should have a really good idea what your rehab is going to cost at this point. Maybe not rock solid, but within 20%.

How long is your option period? That's how long you have to find a good contractor and come up with a solid budget and exit strategy. You've got some work to do!

How are the major mechanicals? If this is only a cosmetic rehab and your numbers are good, I could see where you have room to make a profit on this one (but that is based on what your rehab would cost me here in Dallas).

Are there other flippers in the area? What price/sq ft are other flippers getting? What are they having to do to get that price?

My guess is you've got room for about a 20k profit with a 40k rehab with 6% realtor fees and 14k holding costs. You'll also need to account for insurance, taxes, and title policy. That doesn't leave much room for error. It is a small house, though, so maybe 40k is plenty.

If you can't get a really good feel for your rehab costs and exit strategy before the option period is over, you're going to need to let this one go.

J Scott · Answer

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