Looking to do my first flip in New Orleans. I own a property management company and finally want to get out and do it on myself.
Its a double with 2bd on each side, 1000sqft each side. Rents are about $1128 each side.
It needs about 25k in work. New Roof, Bathrooms, and Kitchen and some more cosmetic work.
Asking price is 64k OBO. I was approved for a HML and i want to flip this house, put tenants in this and sell it to an investor for profit. The ARV is 150k.
What do you think?
I just ran my numbers:
150k arv x .75 = 112.5k
112.5k - 25k rehab = 87.5k
87.5k - 6k (rough closing costs) = 81.5k
If the rehab and the ARV are solid numbers it looks good at asking price. But why not still try and get it cheaper.
The only thing is the ARV is going to be capped at 65% so im looking at total of 97K to work with(purchase, repair, closing).
What do you think?
Do you mean the LTV is going to be capped at 65% of ARV?
150k x 65% = 97.5k
97.5k - 25k rehab = 72.5k
72.5k - 5k closing costs = 67.5k
67.5k is the absolute most I would pay for this deal. And that is with ARV and Rehab being rock solid. Where did you get these numbers? Did the seller tell you them? Did you do the research yourself? Also I have concerns about your plan to sell the house with tenants in place. You would have to have neat considerate tenants to up the value. And if you can find those people why not re-fi(possibly pull some cash out for the next deal) and sit on the deal long term.
be careful with your hard money deals.
they will probably make you pay fees inside your deal, and you will therefore net less than the loan amount.
65% LTV may not actually net you 65% ARV.
65% HML: $ 97,500
HML Attorney: ($ 5,000)
HML Points(4): ($ 3,900)
Title, Closing: ($ 3,000)
Net Proceeds: $85,600
Purchase Price: ($64,000)
Left for Repairs: $21,600
You’re short. Try lowering the price by at least $5-10k, and get all the HML fees in writing.
I work for a national hard money lender and I’ve never heard of anyone being charged a 5k fee for a “HML” attorney. I personally would go with another company if they tried to pull that.