Quick Analysis for Potential Flip

[Walter Parker]

I have a property I’m thinking could be a good flip opportunity in a growing neighborhood. $360 purchase price, potential rent of $4000 total, estimated monthly expenses $1800.

Property listed below:

https://www.zillow.com/homedetails/8-Islington-Ct-Charleston-SC-29403/10907987_zpid/

[Jack Morris]

From what I understand, you would be in the property for $460,000 (360k+100k Renovation).

If your numbers are: 

1) Rent: $4,000 Monthly ($48k Yearly)

2) Expenses: -$1800 Monthly ($21,600 Yearly)

Assuming you've taken CapX into account, this would be Cash flowing $2,200 Monthly (26,400 Yearly), which would be a 5.7% ROI ($26,400/$460,000). But this is taking no Mortgage into account. At a 20% Down-payment, you would be in the property for $92,000 with a mortgage payment of about $1,650 if rates were at 3.5% 30-YR ($19,800 Yearly), Making the ROI 7.1%.

These numbers would be too tough for me with the risk level involved in this deal. THEN if you were trying to flip this property, to make even 15% on your money you would need to sell it for $529,000, which isn't taking into account closing costs.  And I don't know if an investor would buy it at that price.  It depends on your Market and if investors are buying for cash-flow or appreciation.   

I hope my 2-cents helps.