Possible FLIP Deal- Thoughts?
Got a possible deal that I'd love all of your thoughts and opinion on. Thanks in advance! :)
Market: Cook County, IL- Northwest Suburbs
Spec: 4/2 Split Level w/ finished basement, attached garage, 1092 sq ft., 51 yrs. old.
Sale Type: Bank owned web auction. Opening bid $60K; reserve unknown
Level of Renovation: Complete interior cosmetic + Cabinets/Vanities, Countertops, Doors, Appliances, Washer/Dryer, and Water Heater.
Demographic Analysis: 50% of listed non-distressed homes within subdivision have sold within 6 months.
4.25 months of total inventory
10.2% unemployment as of July 2013
"Major" corporations and employers within 5 mile radius
$59,623 median income
Disposition: Property is situated in a well developed urban community with great schools and almost zero crime. Home surrounding the property are all very well kept with mostly updated exteriors, clean lots, clear roads, and well developed landscaping. There's definitely pride of ownership amongst all the neighbors. Plenty of major retail shops, restaurants, and entertainment all within close distance.
Comp Analysis:
Personal Valuation w/ detailed systematic approach (Please inquire for methodology): $176K-$232K w/ avg. being $201K
Agent Valuation: $200K-215K "conservatively." High-end $225K
Exit Strategies:
Flip
Refinance into rental. Rental rate conservatively for area is $1500-1700/mo.
Refinance and offer a lease/option to buyer with negotiated terms.
Financial Analysis:
*I prefer @J Scott 's flipping formula:
Worst Case-
Sales Price (ARV): $200K
Fixed Costs: $28,425 (Purchase, Holding, Selling, Private Investor Interest Payments)
Rehab: $40K (high-end)
Profit: $25K
$200K-$28,425-$40,000-$25000= $106,575 MPP
Price Ratio: 53%
70% Rule?: Actual 73%
Best Case-
Sales Price (ARV): $200K
Fixed Costs: $27925 (Purchase, Holding, Selling, Private Investor Interest Payments)
Rehab: $30K (low-end)
Profit: $30K
$200K-$27,925-$30,000-$30,000= $112,075 MPP
Price Ratio: 56%
70% Rule?: Actual 71%
Thank you for your thoughts! Any and all insight is appreciated. Please let me know if you have any questions. I'll provide my full detailed and comprehensive analysis upon request. Thanks again!!!
Paul