I’m thinking you might need to look for another deal.
According to your numbers, you’ll have about $180K-plus tied up in a house that might be worth $205K. When you add in all of the other costs and the possibility that your $205K might be wrong (let alone what happens if you pay a 3% commission to a buyer’s agent), there might not be any margin in this deal at all. And if there are a few bucks, it’s not worth the risk…
Having said that, if you know of someone who will take the contract off your hands for a small profit, run with it. I would be surprised that an investor would buy it, though.
I agree that house will not work in anyway find another deal that is at least 70% under actual value minus repair costs…
Example.
After repair value 100k
Needs 10k in repairs.
Your offer maximum should be
70% (70k) minus repair (10k)= $60,000 maximum offer for a fix and flip. If you are going to fix and rent then you want to make sure on this property you have a gross rent coming in of $1400 per month minimum to justify a 70k total investment. 1400/.02=70000 DOnt forget closing costs. Most investors would not touch that property as a wholesale flip unless they like to lose money…
I agree for the most part, but I think your numbers are a little off. There’s not much chance of getting $1400 rent for a 100K house anywhere close to me. More like about $900-1050. My 132K appraised house will rent at $1200 max, with alarm system and totally renovated. .01% is what I would bank on, and anything above that is a plus.
You’re quite right that not all markets are the same. I see all these posts about people who are getting 2% of the property’s value each month in rent, and it just amazes me. In my market, it’s a really good deal to find a place that generates monthly rent of 1% of its market value. I just sold a duplex for $170K that generates monthly rent of $1400, and it was sold in less than two weeks.
This property is a preforeclosure! Can I SS with bank to create the equity for profit???
The entire deal has changed anyway. My wife and I went to look at the property today and found it was totally trashed! The owners must have felt pretty bitter before they moved out. Does this create a better situation? The repair cost just got much higher. I am even thinking maybe 30k to 35K as a first guess but don’t I now have much more room for negotiating a SS with the bank? The repairs are ALL cosmetic. I could even move in and make the necessary repairs myself! If I can sell my home, I will have more than enough to cover the rehab costs. How can I make this deal work? Especially since the bank hasn’t started any foreclosure proceedings yet. Do I have a dream deal in the making now or a nightmare best to stay clear of?!?!?
Here is what I am thinking:
ARV - $205k (Comps are between $205k and $215k)
HO owes $160K + $6k deficiency
repairs now looks like $30k to $35k but maybe much lower if I move in and do the work myself
$10K for holdings and RE commission on the sale
Offered a cash deal to the bank @ $120k or a bit lower for neg room.
Does this work? I am looking at a profit of $45 if my numbers look good (before Cap gains tax). I tried to keep everything on the high end.
Now, IF all the numbers look good, how do I make this happen since the NOD hasn’t even been filed yet?!?!?
the bank will not accept that. however it never hurts to put an offer in - however - make it lower than 120k. to me, with 35k in repairs and 10k holding with 210k ARV - and add to it that you’re new to all this - offer 110k cash.
the bank will not accept, they’ll just foreclose on it - do you have information about the bank or the mortgage - is it a FHA loan?