I was presented with 2 different properties from who I believe is another investor I am a little unsure as to which of the two if any could be a good deal for me to put under contract and flip to a rehabber please let me know what you all think…thanks in advance for all comments this could be my first deal :help… here are the numbers for the first property
3bd / 1ba
ARV $64,648
Repairs 10-11k
Tax Value $65,300
Taxes $847.00Yrly
Cost - $35,107 includes all closing cost
and the second
3bd / 1ba
ARV $61,074
Repairs $1,500 to $2,500
Tax Value $52,200
Taxes $677.00 Yrly
Cost - $32,500 includes all closing cost and can anyone tell me how and why they have already included closing cost in the price
The last property I bought in NC, the closing costs were less than $1K for an $80K property. Don’t confuse closing costs with financiing costs (loan fees, origination fees, discount points, lender junk fees, etc.). The seller is probably offering to pay the closing costs to make the deal more attractive to a potential buyer who will want to snap up the deal and settle quickly.
I am guessing the seller bought these properties as foreclosures and paid the bank less than $25K each. Whether you should take either deal depends upon your exit strategy for the property. If you plan to flip to another investor, I don’t see much room in either deal fo you to make a profit. If you plan to hold indefinitely for rental income, then either property could be a positive income generator.
Until you establish realistic numbers for your planned investment strategy, you won’t know if you have a profitable deal.
Let me start of by saying Dave I really appreciate you responding u are a great help… and also quite smart because that is exactly how I believe the properties were acquired but the update is she lowered the price on both houses and agreed to pay closing cost after I ask if that was the best she could do so Im at 31,500 for the first and 29,500 I plan to flip to a rehabber
so here is wat I was thinking ARV(64,648*70%)-11000 will bring MAO to 34,253 so yea true not that much room…
with the second ARV(61,074*70%)-2500 will bring MAO to 40251 that dosent look so bad if asking price is 29,500 what are your thoughts? thanks in advance!!
Neither deal is that bad if you already have a buyer on hold. If this is the case, then you have no carrying costs so a small profit on the first deal for just a couple hours work is acceptable. If not the case, then your carrying costs will eat up all your profit on the first deal.
Both deals could still work as rental properties but you have to do a cash flow analysis first to confirm that there is sufficient cash flow to make each deal work for you.
I agree on both points. First one is kinda tight, but hey if you only have to give her a token deposit then why not lock up both of them. You’ll be lucky to get $5k on the 1st one but again what do you have to lose other than your deposit? Even if you only get $500 or up to a couple grand it was absolutely worth it. Second one definitely has room to make yourself a good $5-10K.
I can tell you’ve done a good job on really learning how to tell a deal from a dud. That’s more than a lot of so-called wholesalers will ever do. One tip: completely ignore the tax value. It has absolutely, positively no bearing whatsoever on what we do. At all. Just completely ignore it.