First deal about to happen, HELP a NOOB

Found a foreclosure in Harris county Texas that I want to flip. Here is what I have done:

  1. Inspected the property, and neighborhood and looks like a seller if I buy the property “right”
  2. Ithas some foundation work that needs to be done and have an setimate
  3. I have a hard dollar esitmate on the rehab, plus a retired contractor to check the bids. THE HOUSE HAS EXTENSIVE INTERIOR DAMAGE.
  4. Meeting with realtor tomorrow to possible sign the contract
  5. We have the comps


When buying a foreclosure I know I am buying “as is”. Is there anything I should put the in contract other than getting it financed?

The house is listed at $ 66,500. My rehab cost will be $15-17K. I havn’tgot the hard money cost just yet and was wondering if you guys had a ballpark working estimate.

I have a number in my head that I want to offer for this repo, but was wondering what you guys’gals would think a good starting number would be.

It’s a single family/3-2/1100 SF/built in '71/will fix up nicely.

I know that I have ot provided all the info you need, but I want to do this first flipper house without too many noobibe mistakes.

Many thanks for the advice and God bless.

what is the after value cost once the rehab is completed?


that’s not a good deal for us.
the numbers are too low from the rehab

Also, what about liens? Since I am buying from the bank or mort co. do they have to disclose anything about liens aor clear title? Help!

by the time you finish with closing cost you will have no money left over

where are you located?

it all depends on your plan our plan is not to hold property until we have at least 500k in our account.

on deals we look to make a min of 5k- up after expenses that’s for an assignment deals

flips we are at a min of 20k so you have to have a plan on what you want to accomplish.

This deal is for me. I want to:

Buy the property at $37-40K (listed at 66K)
Put $15-17K in repairs
Pay hard money cost
Then sell it for $89K The comps agree with selling price.

Buy house from lender at $40K
$17K Rehab (firms quotes)
$57K invested
Sell for $85-89K less hard money costs.


All of the above assumes that I can buy this house at $40K ish.

pOOOOO that’s different if you get it at 37k then it’s a great deal cause your after market value will cover the cost of expenses…i didn’t have that info before.

Did you say it needs “foundation work”??

Whats wrong with the foundation?

My contractor says it needs about 20 piers at $100 each. Very common in S. Texas. The company gives a lifetime warranty.

I also wonder what my chances are of buying this “dog” at say $37-40K when they have listed it for $66K . Any experience or rule of thumb?

Many thanks! You folks are great.

Hi Skeeter,

I checked over all of your math and it looks like a good deal, but it all depends on whether the bank will dump it for $37,000. That’s a big what if. My gut feeling is that they won’t. Just ask them how long it’s been on the market. If they’re desperate to sell, they might accept a low ball offer. If they’re not motivated, they’ll probably laugh at you and make a counter offer. Either way, you need to run the numbers so that you know what your maximum bid is (your limit) so that a profit margin still exists.

Thank you for the reply!

I was thinking that we could make money even if we paid $40-43K for the house. I may offer $40K to start. The days on market are 98.

Do you have any idea what some hard moey cost would be for my equation?

Many thanks for your expertise.

For a quick sale, I would count on getting 80K for the property. Then working backward, 75% of 80k = 60k and then subtract fix up costs leaves you at 43k. That would be my max on the deal. Start with a low ball offer and work up. You won’t get the deal any lower than your offer, but you can always increase your offer if they say no to the firstone. Remember that 25% (20k) has to cover all of your holding costs as well as selling costs. If you have not calculated all of the costs correctly, you may end up with less than you had expected. Just because you have found a house that you like and the bank wants to sell, don’t let the bank stick you with an overpriced lemon. Remember that you are the one taking the risks. You need to be paid for it.


Ok here is how my numbers would look on the same deal…

ARV $85,000

Repairs $16,000
Closing costs (5%) $4,250
Mortgage, taxes and insurance payments @ 6% (~$400x3) $1,200
If you sell using an RE agent (6% of ARV) $5,100

Total expenses FSBO = $21,450
Total expenses Realtor = $26,550

Total debt = $61,450 - $66,550

Profit after sale in 3 months:
FSBO = $23,550
Realtor = $18,450

either way a good deal for a newbie. NOW! :-[

Will the bank take 40k prolly not. If the listing has been out you and every other investor has thrown the same 40k number at it cuz everyone aims for the $20k profit number. I am comfortable with a $10k profit on my first deal after consider all the things I consider up above. Some banks won’t even counter offer they will just reject it and ask you to submit another offer all over again. DOH!

I tried a lil speel with the listing agent of one of these REOs… well I was thinking of putting in an offer of 49K… she says well that would be a lil higher… a LITTLE. So we tlak some more then I say SO you say if I put in an offer for 47K that will be a lil higher? She studders and says well 49K would be a lil higher. Now ya know where everyone else was at when they got rejected. 8)


The problem with “being ok” with a $10,000 profit on your first deal is that you probably won’t get $10,000 if you calculate it tightly. Even if you have a good estimate of the work to be done, there are always things that come up that were not in the original estimate. Also, if the property does not sell quickly, you are going to have holding expenses nibbling at your profit. It does not take long for a profit to become a loss. With this being a first deal, it can be a killer.


Understood. Usually I will look at comps and since here in dallas it is a buyer’s market most houses are at 3-4 mos. days on market (DOM). So typically I set one more month over that for holding time.

As for repair estimates I throw a pretty big number at a house knowing that it will be much lower to do actual repairs. This last house I figured $15,000 and when I let a friend of mine that does house renovations look at it he said his guys could do it in 3 weeks for $7,000. He said he could go lower if I did all the demo which I planned on doing regardless. I have more time than money when it comes to evenings and weekends. :wink:

I also figure in 5% of ARV for closing costs on both ends. Sometimes, depending on the ARV I have to adjust that a bit.

All of that I shoot for $10k by realtor and $15k FSBO, but because I am always looking at worse case scenario I keep the realtor profit number so incase I don’t get a quick FSBO sale.

I also think I can lower my costs on realtor commission from 6% to 3% if I oay for one of those MLS listing services. That would save me another $3,000 on a $100k property.

So how is it going skeeter?