This is my first Driving For Dollars potential deal.
3/2 split level built in late 70's. Needs between 20-25k in rehab. Owner owes 71k but is willing to allow me to take over payments of $480mth. ARV is $112000 tops but I like to do a FARV (Fast After Repair Value) which would be $104k. I am primarily a flipper so these are actual numbers and not "wholesaler" numbers. In my area about a 74% rule applies for me.
I am open to keep as rental (about 12-15k in repairs/$800 mth rent), fix and flip, or other?
What would you do and why?
And before I start getting beat up about not being enough profit to fix and flip I know this. I would like experienced and inexperienced peoples input so that newbies can compare their responses and assumptions with experienced investors.
@Chris C. an owner will to Sub-To a flip for $480 a month, what is not to like about that!
Have you walked through the property yourself? $20-25k in rehab on a 35+ year old house seems low. How is the roof? HVAC? Flooring? If those are in good shape, or have been replaced recently those numbers may work.
Have you considered a Sub-To from Seller, then sell to another Buyer with a Wrap? You carry the note? Listen to Podcast #70 with Grant Kemp if you haven't yet!
@Chris C. You already know there is not enough margin for a flip. And I don't particularly like it as a rental. You'd have maybe $20K into it (including closing costs) to cash flow, what, $200/mo?
It is one of those "almost a deal" situations that you come across all the time. We have to have the discipline to walk away.
At best, someone else might be comfortable with this, so maybe you could pass it to another investor for a finder's fee.
First off I made a rookie mistake in the payment. Quoted above includes escrow of $147. Actual loan payment is $325.
@Kerry Smith This is exactly what I was thinking of doing. I would need to put about $2k into it to replace some rotten wood then take $5000 down and wrap for $580-$600 mth as is. Less then 5 yr old HVAC and Roof. The most significant damage is rotten wood on some sole plates in the basement. Water issue has already been solved with french drain but I would also install a sump pump in the crawl space.
@Larry T. Does the loan payment change your opinion?
Thanks for the input guys
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