Very excited about that! A property that we are considering (1530sq ft), we are trying to get in at 105/sq ft. Comps in the area go a little past 150/sq ft. Were looking in the ball park of 30g’s in work (was a group home that needs a lot of work). We will have to pay 19k out of pocket and cover the payments/ins for up to 4 months. Under 10g’s. Looking to sell it ourselves to save on closing costs…
That puts the total cost around 200k, with the comps in the area in the 230k range.
If we have to use a realtor to sell, this will lose upto 20g’s, and risk making under 10 on the deal, but if we sell ourselves, we can make upwards of 25. Tried to use the most conservative figures too, so I don’t get my hopes up.
What do you guys think, sound like a good deal? Would you do it?
Thanks!
So, are they “g’s” or “k’s”??
This deal is thin…
Conventrional wisdom says:
Offer = (ARV X70%) - (fix ups + holding + closing)
Using your numbers this looks like:
($230K X 70%) - ($30g + 19k +10g) =$102K
The problem with your numbers is that there is no money for hidden surprises…and there WILL be surprises! Right at the end of our last rehab, the inspectors decided that the roof had “too much hail damage” and had to be replaced…luckily it was a small house and I got a roof done quickly for $2100…not a deal breaker but a surprise right off the bottomline!
Keith
It is fairly thin, that is actually how we found the property. Another investor passed on it…
I like your formula, too. Havent personally seen that before and it looks like it leaves a lot of room for profit. Any one else out there have any further ideas/info for us?
Thanks a ton!
You can find rehab properties all day long. Keith is right , do the math. But you should see if you can get qualified first, or use someone good credit like an investor to buy the properties when you acquire it. Get your ducks in order. I plan always for the worst case scenario. There is always risk. But if you plan right, you can manage that risk.Most lender require 620 fico and at least some money in the propery to get the deal done. They can sometime do the deal base on the equity alone.
Residential 1 - 4 Family, investor properties only.
LIEN POSITION: First mortgage only.
STANDARD TERM: 6 months with monthly extensions up to 13 months.
ADVANCE RATE: 85% to 100% financing of the total project cost, plus interest, points and closing costs can be financed to reduce funds required at closing. Will loan up to 75% of the After-Repaired-Value.
FUNDS: Renovation funds are usually advanced in one to three draws, and wired directly to your account. Rehab portion of the loan typically not to exceed 150% of acquisition cost unless otherwise approved.
INTEREST: No payments for up to six months. Borrower may finance interest from loan proceeds at closing.
POINTS: Points can be rolled into loan balance at closing and may be partially rebated upon early payoff.
CLOSING COSTS : closing costs (i.e. title insurance, recording fees, etc.) can be financed as part of the loan proceeds.
GUARANTEE: Personal guarantee required.
I hope this help.Like Keith said do the math.