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We decided to forgo the deal because our rehab bids were around 40-45k and our best option HML rate was 15% and 5.5pts.
But, then I managed to talk it to 35k. Wholesaler wanted 50k, but is now willing to negotiate the purchase price. He said it would be an assignment of contract so I'd like to bring the deal back on the table one last time.
Scope of work include:
Hardy board and paint all exterior. 6ft tall 70 linear feet wooden fence.
Windows, all interior doors, opening up kitchen/livingroom wall, new cabinets and granite, replace woodsiding with 1/2in sheetrock, full restroom remodel with standing tile shower, luxury vinyl flooring, all paint jobs and sheetrock repair, and any minor electrical and plumbing.
I'll meet one last time with my partner about this deal and then move on. Any advice or referrals would be greatly appreciated.
I would advise taking 10 percent of your repair costs and add that is a buffer just in case there are cost overruns. Once you start tearing into things who knows what you will find. Especially with bathrooms or termite damage.
10k profit isn't too bad. If you are confident your ARV comps are pretty solid it might be ok. My only concern is there isn't a huge buffer there with only 10k. If you have repairs that cost more or it appraises lower that will significantly affect your profit.
What is your backup plan in the event it appraises low and you only break even? Something to think about. I have seen too many people lose their shirts and hard earned money underestimating things. If you get something in place in the event it does happen then it won't hit you by surprise. Me personally that's too small of profit to even consider. But that's not to say this couldn't work for you.