[Calc Review] Help me analyze this deal

5 Replies

Just a quick glance, I think you did the hold cost wrong too. Have you selected interest only? Also, Description says updated A/C system, electric, and kitchen and it says new windows, flooring, and exterior paint. These are all major $$$ Whats the 20k for? Also your ARV is based on what Comps? 716 sq/ft. 2 bed 1 bath makes it about $190 per sq ft. Seems a little off there.

For short sale it is a teaser asking price. Get your attention and expect many bidders to fight for it. Lender is likely to counter back demand more. 10% interest rate. Is it accurate? Is there strong demand for these 2/1 at $165K(avm)? My quick search suggests the going price is under 100K in a rating 4 and 2 school neighborhood.

Thanks for the input Gregory and Sam. I did chose interest only. I'm working with a realtor so I'll ask about comps. I'll be using hard money and private lenders so I estimated 10% interest rate. Maybe I need to go higher? 

Originally posted by @Barry W Bahr :

Thanks for the input Gregory and Sam. I did chose interest only. I'm working with a realtor so I'll ask about comps. I'll be using hard money and private lenders so I estimated 10% interest rate. Maybe I need to go higher? 

Barry, if you are using a HML then, glancing at your numbers, you are probably underestimating the closing costs.

10% interest (only) is realistic but $2.5k closing costs is IMO not. You are likely to pay 2-3% in closing points (could be higher) plus appraisal fees ($400-500?) plus title costs ($750?) plus any other fees that your HML may feel like charging.

Don't forget property insurance for probably $1M liability. 

So unless you have lined up a HML and know your closing costs, I would be a lot more conservative with them in your calculations. 5k-7k. Best be conservative and be pleasantly surprised if its less than be shocked when its more.

As an aside, will you have reserves set aside for cost over-runs and emergencies?

Best wishes.

Thanks Benjamin for taking time to review my calculation. It is much appreciated. This is my first deal and still unsure about estimating costs and fees. Your input is very valuable.