is this a deal?

Question

This is a short sale listed on zillow.  The sale price is $60k and the zestimate is $100k...comparables seem to be in the 80-90k range.  It's a 3 bed 1.5 bath. Here is the link to it...

http://www.zillow.com/homedetails/2085-N-San-Sebastian-Way-N-Clearwater-FL-33763/2119164587_zpid/

what do you guys think?

Steve Babiak · Answer

I bet Jon meant to write "How much work to get it ready to rent?"

Ryan Stoltz · Answer

I just emailed the listing agent on zillow and asked for some comps.  I'm going to take Nathan's advice and try and get the house for around $50k to make the numbers work.  I'll update this post if I get any further along

Ryan Stoltz · Answer

wow that sucks...thanks for breaking that down for me

Nathan Emmert · Answer

$500 - $170 = $330 (mortgage payment)... $800 (GOI, Gross Operating Income) * 50% (rule of thumb on expenses)= $400 (NOI, Net Operating Income)... $400 - $330 = $70 (free cash flow)... $70 * 12 (months in a year) = $840 (yearly cash flow)

Ryan Stoltz · Answer

Nathan Emmert

For the $500 mortgage that included the $170 in taxes and insurance so the mortgage by itself is $330. Sorry for the confusion.  For the CoC how do you come up with the $840? I don't know what 50% GOI is sorry

I used zillow to come up with my $80-90k ARV.  Are my other options going down to the courthouse or what?

Thanks for the help everyone

Ryan Stoltz · Answer

Jon Holdman...just wanted to include your name so you know I replied to your post

Nathan Emmert · Answer

So you want to pay $60k plus $7k for something that will sell for $80 - 90k.  You'll end up paying about 10% to sell the place leaving you cash out in the $72 - 81k range... leaving you $5 - 14k profit... that doesn't include any holding costs... seems pretty tight.

Your other strategy is to invest $19k ($12k down + 7k rehab) for what amounts to $70 a month in cash flow per your numbers above (used 50% GOI - Mortgage defined as $500 - $170 in taxes).  $840 / $19000 = CoC of 4.4%...  Most target 15 - 20% though having a 15 year amortization is definitely hurting that number some.

In my opinion, having almost a 15% range on your ARV is WAY too wide, you need to know exactly what it will list for.  $14k profit may be enough on a house this cheap, but $5k has red flags everywhere.  Most shoot for 65 - 70% minus repair costs of ARV.  You'd be looking at something like $45 - 55k to make them happy on the purchase of this.

Ryan Stoltz · Answer

@jon holdman

1. my plan is to flip the property using a budget of 5-7k for cosmetic fixes such as kitchen cabinets and carpet and a bit of landscaping

2. I would say around 5-7k should do it...I'll be doing it myself

3. 'How must work to rent?' - I don't understand the question

4. with 20% down and 15yr fixed loan plus $170 in taxes and insurance, my monthly expenses would be around $500, so if flipping it doesn't work I would rent it out as a backup plan for $800/month

Jon Holdman · Answer

What's your plan for the property?

How much work does it need to sell?

How must work to rent?

What would the rent be?