First Flip and scared to death

[Eddie Quirk]

Well, have been looking for rental properties but now came across a home for $85,000 cash and market analysis shows should get around 155-165K so may be a good profit. Roof needs replaced, wood rot on Fascia-, needs new flooring in some rooms and lots of cosmetic items. AC is newer. Not sure what I’m doing but going for it, wish me luck!

[Charlie MacPherson]

@Eddie Quirk So if it was in GOOD condition, you would stand to make $75,000 gross profit.  ($160,000 sell price - $85,000 acquisition price).

However, you have all sorts of expenses - and I'll just guess at your costs below.  Things may be different in FL, but these numbers are about right here in MA.

Roof $10,000.  $65,000 left

Floors $5,000.  $60,000 left.

Wood rot $5,000.  $55,000 left.

Cosmetics $10,000.  $45,000 left.

Surprises. $20,000.  $25,000 left. 

Closing costs. $4,000.  $19,000 left.

Carry costs (loan, taxes, insurance).  $5,000.  $14,000 left.

Re-marketing costs.  $6,000.  $8,000 left.

If you decide to update the electrical, plumbing, kitchen or baths, you're in the red.

This deal makes sense for a handyman / contractor who wants to owner-occupy and wants a deal where he can do most of the work himself.  There's nowhere near enough meat on the bone to flip for a profit.

I think you'll need more than luck, but good luck!