Sweet DEAL in North Carolina Rehab/Flip (check my numbers PLEASE)

4 Replies

Hi BP!!

Looking for some help checking over my numbers for this deal or no deal. This is large higher-end home in foreclosure.

Price/offer: 200k

SQFt: 4,500

p.psqft: $44.5!

8 yrs young!

Repairs- 100k (with buffer) Has an easement issue, spoke with attorney there are a couple ways to go about to re-mediate. Including attorney fees and being a friendly neighbor, and paving 6ft portion on driveway ( best way sum-up). Because of this will need cash buyer, non fanciable. House is 90% complete needing finishing work (clean paint, trim, fixtures, grout,appliances) a layer poly on woodfloors, driveway work, spruce the yard/front steps. 50k for cosmetic- 50k for larger items.

ARV:450k (conservatively)

Tax Value- 475k ( area reflects homes selling over tax value)

All-in$: $330k (200+100+30(fixed costs)) Profit: 120K range...RIGHT!?!

The entire small neighborhood reflects with similar luxury homes.

Using private money....and want to double check with the BP community, as the private "lender" is new to RE investing. TIME IS OF THE ESSENCE, it may help to show him more seasoned RE investors advice on this deal. I am newer to rehabbing, have a solid business relationship with private lender. he knows my character, work habits, ethics, transparency and trustworthiness. We have a great team (realtor- successful rehabber) partner & consultant have 30+ years of building experience, additional contractors in place and professionals for larger items.

I see the DEAL and want to make it HAPPEN, am I missing something??

Please share your thoughts!!

All-in$: $330k (200+100+30(fixed costs)) Profit: 120K range...RIGHT!?!

Not sure what all is going into "fixed costs", but you are omitting a BUNCH of expenses. Assuming the $200K purchase is realistic (what's asking?) and the $100K rehab budget is accurate then purchase plus rehab is 67%. Which does make this a really, really good deal. I would estimate the true profit potential at about 15% of ARV or about $67K. Your hard money cost will be about $30K, assuming a loan of about $300K. Selling closing costs will be about $36 assuming no seller concessions are needed. You will also have some purchase closing costs, up front costs and some holding costs.

Jon Holdman, Flying Phoenix LLC

Thanks @Jon Holdman...I truly appreciate your feedback!

They are asking just above 200k. I was referring to fixed costs as (purchase, holding, and selling costs) Im too low! Been reading JScotts books over and over and over! ok- re-evaluate that then... purchase-7k hold-5k sell-36= approx to 55k(costs and fees) . (450k (salesprice)-100k(repairs)- 55k(fixed cost)-67(profit)= 233 (max purchase)

We are weighing/discussing a 50/50 split on profits with the private "lender" vs. loan type scenario... any advice there?  It is a family friend looking to make money on his money:)

Thanks again!

@Jon Holdman undefined

OR

ARV*.7-repairs= max offer

450*.7 (67.5kprofit & 67.5kfixedcost) =315- 100k (repairs)= 215k max offer

@Allison Ezzi  

The deal seems pretty good IF your ARV is accurate. Be sure to account for a long marketing period for a house at that price point. Houses in the sub $200k range seem to be flying right now, but I'm not sure about one at that price point.

But, the numbers look good if you can resolve the issues and stick to budget. Good luck with it!