Evaluate my Deal!

Real Estate Deal Analysis & Advice
10yFollow

Evaluate my Deal!

Nino AlfanoPro Member
Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes

Offer Accepted finally. Closing date un sure (feb 1st?$

The House:

  • 2/1 889SQ Full Walkout Basement Plus Finished Attic. Detached Single Car Garage. 

The Numbers:

  • Listed Price: 129,900$
  • Purchase Price: 119,500$ (7 counters later!) 
  • Retail Rehab: 32k 
  • Estimated Rehab: 26k (My Cost) 
  • After Repair Value: 220-240k (Shooting for highside with finishes) B+ neighborhood 
  • Rent: 2,200$ (2 blocks from university) 
  • Taxes: 3,850$ (320$ monthly
  • Loan Type: FHA 203k Nonstreamline (Self Help) 
  • Closing Costs: 7,800$ (Not sure where those numbers are coming from? 3.5%- 4,375$ down plus 1.75% -2,187$ MIP plus closing 1,237$ Guess?) 
  • Estimated Holding Costs: 4,400$ (3 months rehab 1 month sale PITI+Utilities 1,100$)
  • Selling costs 3% 7,200$

Scope Of Work 

  • New flooring Hardwood(Herringbone Pattern) 1st floor 2,000
  • New Kitchen 6,500
  • New Bathroom 1,500
  • Paint Interior/Exterior (Loan)
  • Add Crown/Trim 1,000
  • New Windows (Loan)
  • New Doors 1,000
  • Add Dormers in Attic (120 Sq gained) 2,500
  • Finish Basement 5,000
  • Add bathroom in basement 3,500
  • Tuck Point Exterior 1,500
  • Pavers over concrete patio 2,000(optional)
  • Pacers over front walk 500(optional) 
  • New Concrete Driveway 2,500$(optional) 
  • Side Garage 1,500

- The house after Rehab will be 3/2 1009sq -

I Am utilizing the FHA 203k loan. Purchase price 119,500 will be replacing windows/paint/adding GFI in kitchen/bathroom with the loan. This will be 4,500$ on top of the Prichard price 124,000 total loan amount. 

I am the approved contractor. They are only giving me Material cost not labor. 

If I missed anything let me know and I am not sure if I am going to Flip after the 90days (FHA requirement to get more than 120% of purchase price) or cash out refi in 6 months and rent property or HELOC. 

I guess it depends on credit.

This property was acquired from the MLS

What would you do on this project ?

If all estimates are correct what is my projected profit on a flip and monthly revenue ? 

Advice appreciated 

0Reply
32 views

Most Popular Reply

Justin Spaulding
Real Estate Investor · Milton, WI · Member since 2015 · 52 posts · 14 votes
10y

So many ways to skin a cat. I would flip it, invest in a 4 unit or greater and rent that.  What I am looking at doing as using single family houses as flips...I've seen the power of having multiple units under one roof. Flip and take proceeds to make multi-family purchase and repeat. This will be your quickest way to build wealth!!....in my opinion. Great work!

1Reply
See this reply in the discussion

27 Replies

Jump to latestLatest
  • Account Closed
    Real Estate Investor / Joint Venture Specialist. · Crown Point , IN · Member since 2014 · 1k+ posts · 238 votes
    10y

    Who put the construction numbers together?

    0Reply
  • Mike Wood
    Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    10y

    @Nino Alfanois $250-270/ft2 what the comps are going for? Sounds high for a suburb.

    Your costs seem really low, but if you're doing all the labor you might be able to do it. I assume that you don't need licensed electricians and plumbers where you are at, at least not at those prices.

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    These are my costs. Would cost an extra 7-9k if I have another contractor perform everything. 

    My only sub costs are plumbing and electric and electric is coming from the FHA 203k loan part.

    Some of those numbers are material only. Which is why they are low. Since I have to "live in" I will complete 80% of the home. I have licensed plumbers and electrians on my team. 

    @Account Closed

    Comps are for 1100 sq and under no basement 200k-220k

    Comps are for 1100 sq and under with finished full basement 240k-300k

    Wheaton IL

    Comps used are within 3 blocks 

    0Reply
  • Account Closed
    Real Estate Investor / Joint Venture Specialist. · Crown Point , IN · Member since 2014 · 1k+ posts · 238 votes
    10y

    What all needs to be tuck pointed? 

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Mike Wood

    240$-260$ Sq is where it is at. There is some highs and lows and closer to 300$ and low end under 200$

    0Reply
  • Mike Wood
    Developer · New Orleans, LA · Member since 2015 · 1k+ posts · 898 votes
    10y

    @Nino Alfano Then the ARV indicates you got a screaming deal.

    Rereading your post, why are you only using $4500 for repairs? Seems like a lot of hassle for so little money.  I looking into the 203k loan for my first property, and gave up on it do to the hassle.  I thought the whole purpose of the program was to use the loan to pay for the renovations.

    Your numbers still look a bit low, particular the bathrooms.  For the original bath, I would bet it would be hard to buy materials for that price ($1500), unless you are using very cheap materials.  For the new downstairs, that is super cheap.  On my new construction projects, I use around $10k for the ballpart price of a bathroom.

    As for what to due with it, I would recommend holding it as a rental. With rent at $2200, it will cash flow very nicely, and your basis is quite low. Plus, you could always do a cash out refi later to tap the equity for another project. With ARV being $230k, you would have access to $35-45k (assuming a 70-75% LTV).

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Account Closed just the front of the home for now. Which is about 200sq which would be 600-750$

    If I do all sides of the home it'll be closer to 3500$

    I have a good guy he did a limestone foundation basement tuck Job and does great work for cheap 

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Mike Wood for the existing bath. The tub is staying and just new toliet and vanity 450$ - 

    New tiles on floor and wall. Subway tiles in shower surround material cost 350$ -

    Floor tiles 300$ - 

    Purely Cosmetic.

    I worked in the construction/ new construction/ remodeling field for 6 years shadowing my uncle. Took  a couple guys and started my own remodeling design company. 

    I'm young eager and ready for sweat equity!

    As for the new bathroom in the basement. I don't have the plumbing sub cost which will be 2500$ unfortunately. 

    But the fha 203k usually is for the whole remodel. But since this is my personal loan I am only approved for 128k. So I don't have the 30k available in rehab to attach to my loan. If I could I would. But a streamline fha 203k loan to have to have a HUD consultant and you have to follow every guideline there is. So it is better to use the loan to acquire the property. But they won't approve the loan unless the requirements are fixed. No pealing paint gfci per code windows no leaks in roof etc.

    So the only thing being attached to my purchase price is  the 4500 for windows paint and gfi. Which was quoted at 10k (7 windows) but they will only give me material cost to fix what is required because I am The home owner and contractor. 

    0Reply
  • Justin Spaulding
    Real Estate Investor · Milton, WI · Member since 2015 · 52 posts · 14 votes
    10y

    So many ways to skin a cat. I would flip it, invest in a 4 unit or greater and rent that.  What I am looking at doing as using single family houses as flips...I've seen the power of having multiple units under one roof. Flip and take proceeds to make multi-family purchase and repeat. This will be your quickest way to build wealth!!....in my opinion. Great work!

    1Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    I am leaning towards flipping so I can flip another one. 

    It's great working for the investor/ home owner as the contractor but it's better being the contractor and investor!! 

    @Justin Spaulding

    0Reply
  • Justin Spaulding
    Real Estate Investor · Milton, WI · Member since 2015 · 52 posts · 14 votes
    10y

    Awesome man...post some before and after pics if the deal goes through! @Nino Alfano

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    I 100% will, I will Follow up with exact numbers soon

    0Reply
  • Jeremy Garcia
    Investor · Albuquerque, NM · Member since 2015 · 36 posts · 10 votes
    10y

    @Nino Alfano,

    I highly recommend using the Rental Calculator and Flipping Calculator that BP has to offer in the Tools section of the BP Menu. I have found these tools to be very comprehensive. ..especially if you know your numbers. ...like you do.  I think they will help you with your decision.  Below is a screen shot of where you can find them....

    If my quick math is correct you will be able to pull out about $54k with a 75% cash out refinance, after deducting your suggested costs (check my math on BP calculator). I'm not familiar with your market but in mine I would probably buy a multifamily, or two SFH's. Not knowing your long term goals...my advice is a "shot in the dark."

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Jeremy Garcia

    Yes the BP calculators! 

    They make me want to go PRO.  Hopefully I hear something about a closing date today before holidays 

    0Reply
  • Jeremy Garcia
    Investor · Albuquerque, NM · Member since 2015 · 36 posts · 10 votes
    10y
    Originally posted by @Nino Alfano:

    @Jeremy Garcia

    Yes the BP calculators! 

    They make me want to go PRO.  Hopefully I hear something about a closing date today before holidays 

     Im sorry Nino...I thought the calculators were available to everyone!  Before I got a pro membership. ..I could have sworn that I could use the calculators but on a limited basis...is that not the case for you? 

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    Ya I have limited use I believe. I am going to check them out today 

    0Reply
  • Evan Roberts
    Contractor/Realtor/Property Manager · Baltimore, MD · Member since 2015 · 73 posts · 42 votes
    10y

    Sorry to be the buzzkill but just realize that you are committing loan fraud with this loan due to having no intention of living in this property as a primary residence. Obviously it's what makes sense for you but just something to remember in case someone came asking questions down the line. Not a truly sustainable business model....

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Evan Roberts that is not fraud. I will be living in this property for 90-120 days after closing. Before 90 days I am legally allowed to sell for no more than 120% of purchase price. 

    After 90 days I can sell for any amount I choose. It will be my primary residence for up to 6 months if it doesn't sell after the 6 months. Than I will cash out refinance. 

    @Andrew LeBaron  the main level

    Is just under 900 sq. 300sq of which will not be hardwood so 600sq of hardwood 3$ a sq is usually higher than I would normally pay. Considering we usually put down wood laminate at .65cents a SQ for flips. 

    Another reason I am Going with the 203k process as a home buyer. I am going to make my company a 203k certified contractor. In the area I have spoken with remax/ who is selling my parents house currently. They are doing about 15-20 203k loans a month. A great avenue for steady work for my employees. 

    Considering there are only a handful of contractors doing 203k loans. 

    I took 6 rehabbed properties all listed at over 300$ a sq and noticed after 2 price drops of 10k each and 2 months of waiting on 4/6 of the properties offers accepted for 250-260$ sq. The 2 of ther properties were listed at that sq price and offers accepted within the month.

    0Reply
  • Evan Roberts
    Contractor/Realtor/Property Manager · Baltimore, MD · Member since 2015 · 73 posts · 42 votes
    10y

    @Nino Alfano that's actually incorrect. When you sign your paperwork at closing you'll note that a piece of paper will be put in front of you stating that you intend to make this your primary residence for the next 12 months. Don't you think someone would have figured this out by now if it was that easy? I'm not saying you won't get away with it because people do all the time, but 203k isn't designed for flippers. If a 90 day holding period was all that was necessary every flipper would do it since most reno can take longer than that! 

    Make sure you know what you're getting into because it seems like you're making a lot of dangerous assumptions about this entire 203k process. 

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    it's my interpretation that my lender is under the assumption that I will sell or rent at 6 month mark. 

    Since this is not a HUD owned home nor a homepath home or a foreclosure. I believe I am within my legal

    Bounds. 

    I do see your point and that is true based on my previous HUD home I purchased and back out of. But this home is not the case. Also if it is 1 year minimum than and people do it all the time I would hope I can do it just once. This isn't my business model I am just exploring all loans.

    Untill I find a private investor willing To partner on deals than I am stuck with my loans and cash. Few more flips and I won't be using a loan which is the goal.

    @Evan Roberts

    0Reply
  • Arianne L.
    Investor · Fort Walton Beach, FL · Member since 2015 · 568 posts · 966 votes
    10y

    @Nino Alfano Numbers look great! 

    I was under the impression that there is a one year residency requirement for most owner-occupied loans such as FHA. Hopefully a mortgage banker can chime in regarding this.

    Have you considered refinancing your cash out to fund another rehab, and maybe waiting 2 years to qualify for section 121 capital gains tax exemption? 

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Arianne L. I would love to have a lender shine some light! 

    Financing My cash out is genius!!! I have never thought about that.

    0Reply
  • Nino AlfanoPro Member
    OP
    Contractor · Lemont, IL · Member since 2015 · 335 posts · 76 votes
    10y

    @Andrew LeBaron

    https://www.biggerpockets.com/forums/311/topics/242514-90-day-flip-rule-fha

    0Reply
  • Evan Roberts
    Contractor/Realtor/Property Manager · Baltimore, MD · Member since 2015 · 73 posts · 42 votes
    10y

    well damn. I'm glad to be wrong! That definitely opens some doors for people. Thanks man!

    0Reply
  • Account Closed
    Real Estate Agent · Richardson, TX · Member since 2014 · 511 posts · 161 votes
    10y

    @Nino Alfano numbers look great! i would double check with your lender if you are indeed allowed to sell the property in less than one year.

    Ive never used FHA loans but I know for a fact that you cant resell a property in less than 12 months if you are using a conventional loan. Good luck and keep us posted.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free