The purchase price for the property below is 70% LTV, but the hardmoney lender doesn’t want to lend on it because it’s not 70% LTV including the close and repairs. Is that standard? If that’s the case I would have to look for deals that are more like 65% LTV to include closing or 55% LTV to include closing and repairs right? Thanks
ARV 226
Price 158 (70% LTV)
Close 10
Repairs 25
Hold 8
Total Cost 201
Profit 25
I always wonder about these types of numbers. I see a lot of them here and they’re always proposals on how to profit but there aren’t too many that report back on what actually happened.
On that 25k profit, it doesn’t include realtor fees and closing costs. If you pay 5%, that’s 11.3K. All those flip and fix shows never seem to include them. I suppose you could do it yourself and just pay a buyer 2.5% but it’s more work and FSBO’s have a harder time in a soft market which is what this area is headed into.
Then there’s other taxes that are paid when selling that don’t come into play when buying, depends on your state though. And if you sell before a year, there’s no 1031 exchange. Your profit is also taxed at regular income tax rates too so at the end, what do you really have?
I work in a very competitve market in FL, so its not easy to find deals much better than 70% LTV from wholesalers. What kinds of LTV margin do you guys feel is reasonable in general?
As the seller my my closing costs after the rehab should be minimal. I plan on doing FSBO and putting the property in MLS for a few hundred bucks. Also I thought it was standard that the buyer is responsible for his agents 2-3%.
As far as taxes I’m buying as a LLC. I don’t know all the specifics on this, but I think taxing is much more favorable going into the company and offset buy expenses.