Deal Analysis, experienced opinions neeeded-LA, Ca

2 Replies

Hello to All,

My business partner and I (both Realtors in southern Ca)have decided to take the plunge and purchase our first flip.  After running the comps and walking through with my dad and Uncle (both in the business of property maintenance) I have decided to pay for an inspection today to make sure there are no unforeseen issues.  I'm in communication with the listing agent and he is very receptive to working with us.  Please analyze the deal and the proposed terms of our hard money loan, all input, recommendations and suggestions are welcome.  Thanks in advance!

Home Specs: 3/1.75 1500 sq ft, 5400 sq feet lot

List price: $375,000

Purchase price: $340,000

ARV:$440,000 (comps verified with homes sold in 1/4 mile radius in last 30 days, not to mention a few pending listing at $460ish)

Rehab: $20,000

-Scope of work: 

-Paint int and ext

-finish original hardwood floors 1200 sq ft

-new windows

- install 1 ext double door

-landscape back and front yards

-bath1: new shower pan/tile, vanity, bathroom flooring, light fixture 

-bath2: epoxy coat tub and add tile border, new vanity, new flooring, light fixture

-3 new mirrored closet doors

-1 water heater

-kitchen tile

-retouch white cabinets and add modern hardware

-5 int doors

-door hardware, hinges, electric plate covers

Hard Money Loan Terms: $300,000 with 3.5 points and 12% interest

$40,000 cash for purchase

$20,000 cash for rehab

$10,500 cash for hard $ points

$9,000 holding for 3 months (1.5 month rehab, 1.5 month market and sale)

The largest concern is the shower pan in the bathroom caused flooding and destroyed a portion of the bathroom subfloor, I made sure to mention to my inspector that I need him to verify that there are no signs of mold under the home.  The other concern of mine is

that there was a fire in the home (which explains why the kitchen is practically new) and I am having the inspector look into the attic space to ensure there is no hidden fire damage.  My last concern is making a purchase in early Sept means that my listing will hit the market Mid Oct-Early Nov.  I would like to know if the experienced flippers break around this time in consideration of the winter market slow down.  

Once again, any and all questions, suggestions, criticisms etc are welcome, the inspection is being conducted as I type.  Also, if anyone has a hardmoney lender with more favorable terms please give me their contact information.

Clarence Johnson, Legacy Redevelopment LLC | [email protected] | (310) 630‑9805 | CA Agent # 01942911

Forgot to include: 

-closing cost at $10,000 (will attempt to have seller pay)

- $11,000 in selling agent commission (in the event that its sold by outside agent)

Total expenses (purchase, holding, points/int, rehab, and resale): $400,500

Min comps are are $440,000 

$40,000 profit

Clarence Johnson, Legacy Redevelopment LLC | [email protected] | (310) 630‑9805 | CA Agent # 01942911

-closing cost at $10,000 (will attempt to have seller pay)

- $11,000 in selling agent commission (in the event that its sold by outside agent)

Total expenses (purchase, holding, points/int, rehab, and resale): $400,500

Min comps are are $440,000 

Have you included the closing costs of $10,000 and the $11.000 commission in the total expenses?


"concern is the shower pan in the bathroom caused flooding and destroyed a portion of the bathroom subfloor, I made sure to mention to my inspector that I need him to verify that there are no signs of mold under the home. "

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Does your $20,000 rehab estimate include the bathroom remodeling?  It sounds like a low price  for all this renovation.  Can you price out your renovation budget by the room or the job so you can get some more accurate input?

If it takes longer to flip how much more will be the holding costs be?