Deal analysis assistance would be nice

3 Replies

Talked with an Investor Friday

He wants to sell a rehab and he is asking $240K with est repairs of $120K and an ARV of 450K. A search of sold props shows lower prices in the immediate area. Around $360 to $400K at the most.

I would like to get the right to assign this property to another Investor who has a money partner. I need to ensure that there is ample profit for me to take an assignment fee and also need to ensure my end buyer would be able to meet his Investment Objectives. 

I have two Contractor's who claim they are ready to give me estimates. So all figures below are estimates before the professional's give us theirs.

My estimated holding costs were inline with the copied expenses from Buyer C below.

What do you all think? If you will look at the first paragraph of figures, you will see the Most Likely, Best Case and the Worst Case scenario's. These figures do NOT build into account my Assignment Fee. I am thinking $5K for my fee. So if I stand correct in my assumptions, My end buy would like to purchase somewhere between the best case and the worst. And if I get the opportunity to barter with the seller and get the right to assign, I am looking at offering the Seller anywhere from $97,000 to $154,300. All figures below were provided by Buyer C in this transaction. Seller is A, I am B, End buyer is C.

Exit strategy = "Renovation costs to come in from $120K to $150K"  The house is a complete Gut out and rebuild, and the Seller's estimated rehab costs are $120K. The best, most likely and worst below accounts for various scenarios.

ARV Below was used from 2 Comps sold within a half mile of the Subject Property and the last comparable is kind of old at 7 months and 1.7 miles away.

 Any ideas on additional exit strategies? Do any of you use this Exit Strategy?

Seller A: Asking price again is $240,000.00

MLS
Address
                          Most Likely      Best Case         Worst Case
ARV $399,000,00 $465,000.00 $360,000.00
70% ARV          $ 279,300.00   $325,500.00       $ 252,000.00
Renovations      $ 120,000.00    $ 95,000.00       $150,000.00
70% ARV - Renovations $ 159,300.00 $ 230,500.00 $ 102,000.00

                            Most Likely     Best Case    Worst Case
Purchase Price $ 169,000.00 $ 125,000.00 $ 190,000.00
Renovations           $120,000.00 $95,000.00 $150,000.00
Closing Costs          $ 1,400.00  $ 1,200.00    $ 1,500.00
Total Cash to Close $ 290,400.00 $ 221,200.00 $ 341,500.00

% of CtC Borrowed 0% 0% 0%
Cash brought to closing $ 290,400.00 $ 221,200.00 $ 341,500.00
Loan Points 0 0 0
Points Cost $ - $ - $ -
Loan APR 5.50% 5.50% 5.50%
# Months Held 9 6 12
Loan Cost (Int Only, Paid) $ - $ - $ -

Utility Cost/month $ 200.00 $ 175.00 $ 250.00
Utility Cost $ 1,800.00 $ 1,050.00 $ 3,000.00
Holding Costs $ 1,800.00 $ 1,050.00 $ 3,000.00

Total Expenses $ 292,200.00 $ 222,250.00 $ 344,500.00


Most Likely Starting Price Lowest Price  Based on Comps and Estimated Sales Price
Unit 1 Sale Price $ 399,000.00 $ 465,000.00 $ 360,000.00
Unit 2 Sale Price $ - $ - $ -
Unit 3 Sale Price $ - $ - $ -
Unit 4 Sale Price $ - $ - $ -
Unit 5 Sale Price $ - $ - $ -
Unit 6 Sale Price $ - $ - $ -
Real Estate Commission $ (23,940.00) $ ( 27,900.00) $ ( 21,600.00)
Net Sales Revenue $ 375,060.00 $ 437,100.00 $ 338,400.00


                         Best Case            Most Likely                 Worst
High Price         $ 214,850.00       $144,900.00         $ 92,600.00
ROI 97% 50% 27%
Most Likely       $ 152,810.00       $ 82,860.00        $30,560.00
ROI 69% 28% 9%
Low Price           $ 116,150.00      $ 46,200.00       $ ( 6,100.00)
ROI 52% 16% -2%

Comparable Listings (MLS)

I dont understand why you would have and cost involved on your end if you are simply going to just assign the contract to end buyer C? 

As an investor I would be buying at about $135,000.  To make $5,000 you would have to buy at $130,000.  As a wholesaler you have a greater chance of losing money than I do.  Your profit margin is only $5,000 while mine is about $55,000.  Be careful.

Bill

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