Please help. Deal Analysis. What am I missing?

[Will Eagles]

Hi, 

So, i have posted before about a possible deal that I was looking at and to be honest, it turned out to be over my head and after walking the property not worth the risk on a property of its size and cost. I have decided to take a different approach in recent weeks and focus more in the lower price range. With that being said I am struggling to fully understand the analysis portion. I have been talking with a hard money lender and it has made me second guess my analysis. I am going to post the actual property posting in hopes that someone can help me understand what I'm looking at. I have followed many of the calculators and forum posts yet the hard money lender seems to think it's not a viable property. With that being said here is the listing. 

http://www.zillow.com/homes/for_sale/fsba,fsbo_lt/...

I'm not concerned about losing the deal but understanding it is my goal here. 

The breakdown:

144k asking

Agent recommended 120k max offer

Estimated 25k rehab

Comps selling for 175k-210k

Based my goals around the lower end of the comps but would list around 185k

The property is in a big of a strange location but a great town. Am im off base by seeing that there is room to profit on a flip of this property. I understand that its only a 20k profit but on a property of this type that would be fine with me. Am I missing something that a hard money lender would not like about this property? Even my rehab cost I used an estimate with a 20% increase for fudge factor. This would be my first flip. Any advice would be appreciated since I am learning. Thanks everyone.

[Christopher Phillips]

@Will Eagles

I took a look at the listing. There are homes along the track going for roughly around $200K. So, for a rental, I don't think the track is a "big" issue.

The main issue will be the "right" comps given the spot and the repairs needed. I think the $25K in repairs is a risky number. When you post "cash only" or "cash or 203(K) only" that's a sign that there is something really wrong with the house that would prevent traditional financing.

On the surface, the photos are deceptive. Yes, even for a rental it could use new carpets and some updating, but if the owner is holding for cash, that means there something else going on.  The listing states buyer would responsible for the Use and Occupancy (U of O) permit. That combined with "cash only" makes me think it wouldn't pass inspection until some work is done or there are some known permit problems now that would prevent traditional financing.

If you can get to the bottom of the story, combined with a walk through with a GC, you might be able to come up with a proper offer that works for your numbers.