Help analyze this flip PLEASE

[Serge S.]

Just locked an interesting one into contract. Would love to hear the experts advice on this deal, exit strategy is to flip it.

High end condo in up scale neighborhood in Phoenix (off the 51 and Northern for you locals). Locked into contract at $101k cash. REO that is still occupied by the owner, I have made no contact with occupant and bank states no inspection period or contact with the owner is allowed until COE. Built in 1997 and interior condition is unknown but HOA takes care of exterior, roof, etc. Two recent comps:

Comp 1: Same model w same sq footage and floorplan sold 10-22-11 for $139k cash short sale via MLS. 43 days on market. Looks to be in decent condition with no serious upgrades from MLS listing.

Comp 2: Same model w same sq footage and floorplan sold 3-25-11 for $150k cash short sale via MLS. 127 days on market. Looks to be in good condition with some kitchen and flooring upgrades.

No recent non distressed sales. Nearly all past sales don't stay on the market very long.

All other comps are over a year old and are from $185k (8-2000) to 398k (6-2007) at peak.

HOA is $240 monthly with special assessments of $5k last year and $3.5k the year before. HOA monthly fee has doubled in last 5 years. Overall HOA fee is reasonable for upscale condos in PHX.

I'm typically a buy and hold investor and only flip if for whatever reason the home doesn't fit my long term ROI criteria after purchase. This one would not be a hold for me as I can't stomach the HOA and I can find better returns.

Finally, keep in mind PHX is VERY low in inventory, homes at trustee sale are selling for retail and there is literally very little buy and hold or flip prospects out there so don't compare this to a deal from two years ago. Its a different market right now.

Any and all advice is well appreciated .... J. Scott and the experts give it to me straight!

[Joel Owens]

I don't like occupied's. If it's occupied I want a really low price.

You might get hit with extra legal fees and time getting them out and if you want to flip it your cash could be stuck in this property for awhile.

The market could go down and then your margins are now minimal compared to the return you got for the time to turn the property and be able to sell it.

Look on here for Will's post about how it took him I think a year to get a tenant out after buying.

Be careful.