Deal or No deal? help doubling checking numbers on fix/flip.

5 Replies

Hi all!

I looking for some advice and help double checking my numbers for a fix and flip in the Asheville, NC area. Want to have a solid MAO, then start offer below to begin negoiations. Also- any ideas on structuring the offer to look more favorable without straight all-cash offer?

ARV- 180k conservatively @ $153 p.SQFT (based off realtor, and ran average price p.sqft for last 90days within1 mile, like house type bed/bath, +/- 20% Sqft) Closer to 158p.sqft

SqFT- 1200

Fixed costs - 35k (super high as needing to use HML, can be adjusted some based off cash for down payment to offset amount through HML)

Rehab $- 30k (will be getting back in property tomorrow to double check for major issue, to the best possible ability) needs near full rehab. (roof- composition shingle on ranch, a/c heatpump needs to be installed with current duct work from furance, 1.5 jack and jill bath, kitchen, 2 bedrooms , its defiantly outdated! carpet, paint, fixtures, lighting, spruce up yard, wood siding= powerwash?) 

Profit 20k (wanting at least 20k, if ARV is higher, then more profit, but running lower ARV)

180-35-30-20=95k or 180*.7-30=96k MAO(?)

Asking 125k.. although they have reduced price already. How can I make my offer more attractive, yes HML can close quick(er) but still viewed as "financing" vs. "cash" correct? We can do 30k down, then HML on 70k vs. 65% ARV (117k) then 30k our cash for rehab. This ties up our cash and is intimidating for first fix/flip! I guess the plus of working with HML is they double check ARV...

The HML is not ideal, but if it makes the deal go through at the right offer, then I will take the risk!

Do I have too much buffer in my numbers, not enough? Please share your thoughts. ANY and ALL advice is appreciated! 

THANK VERY MUCH in advance... I don't know what I would do without the BP community!

Asheville is a good market, but you still better plan for a long marketing period. Things here are slow to sell at times. If you stay around that $185 price and you are anywhere near downtown you should be fine.

If your rehab is as extensive as you say, that $30k number may be low. A gut job can be wildly expensive. Asheville is a nice area, and you will need to use pretty nice finishes to really attract buyers.

With that said, IF your numbers are correct on the holding costs, rehab and ARV, it seems like a so so deal. I usually try to get at least $25-30k profit on something in that price range, but if I know I will definitely get $20k and there is little risk, I'll do it. Your HML situation scares me a bit on this on though.

Also, be very careful with the wood siding. If it has lead, you definitely better not power wash it. You may need to just wrap it and put new siding over it.

Thanks @Austin Lee  ! I appreciate your feedback, very helpful. The house is north of the city, which tend to have slightly higher home values then say south...although Asheville does have its "pockets." Its a nice neighborhood, not super high-end, like Biltmore area though. There are a couple houses for sale right in the same area, we are going to get in them to see what level of finishes they have. I will defiantly take the wood siding into account, thank you, great advice! 

As far as rehab- The house was built in the 1970s . Its outdated..yellow shag carpet, old colorful appliances, some wood paneling. Although it defiantly needs work, its not seriously distressed in the sense of rotten floor boards, walls falling, missing windows, etc. An elderly woman has been living in it forever.

The HML is really not ideally, Im still looking for other options, although time is always of the essence, and we dont have all- cash in hand. Any other advice on "funding" the project?

Thanks again for your feedback!

Are you local to the area? I can give you some names of local private lenders who may be willing to work with you.

@Austin Lee  -I will send you a PM and colleague request to connect and see if we can help each other out! thanks:)

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