Help me understand why this is a good deal
Purchase price: 175K
Rehab: 150K
ARV: 450K (conservative; median prices in the area are closer to 485K)
125K spread looks great, right? I think so, but then I think about the cash I have to put in, which is probably around 50K to close the loan and hold the property for 3-4 months (contractor's estimate).
So...let's say we get list price almost immediately (otherwise known as best-case scenario), everything on the surface looks good until you realize that you have to pay taxes on the profits (bye bye, 25K), closing costs on the property (let's estimate 12,500), RE commission (6K).
Right there is almost 35K, so now you have 90K. But then you take the 50K you borrowed from yourself and you're left with 40K.
Would you jump at this? What would you be trying to get out of this deal? I'm asking because I'll be liquidating retirement accounts to try and make this deal happen, so it's pretty important that it work out.
80% return on money sounds great, but I'm also of the mindset that risking 50 to make 40 isn't always the way to go.
Anyone want to make me feel dumb for even questioning this deal? (That's what I'm really looking for, haha)