Advice On Possible Deal
Hello investors. I recently let a great deal slip through my fingers. I didn't have my financing together. The house had more than 75k in equity. Purchase price 27k ARV 110k. It also only needed at the most 12k worth of repairs. But that's the past time to move forward. I need advice on this deal im working on now...2 beds/1bth 900 sq. ft, finished basement, bathroom has already been rehabbed, new windows......heres the numbers:
Purchase- 28,000
Repairs- im guessing 10k..(needs a little roof repair, new garage door, kitchen needs paint and tiles and there is mold in the two bedrooms at the bottom of the walls (any suggestions on where it came from?) and yard work)
Holding- 1,200 (intrest only payments)
Unexpected- 2,000
After Repaired Value- 60,000
HML- 60% ARV interest 10.9%
Any advice or comments would be greatly appreciated.
Knowing what you've told me that seems like a decent deal. Here is how I worked the deal:
Purch price $28,000
Holding costs: $1200 interest + $450 estimated property tax + 480 estimated utilities = $2130
Rehab: $12000
Realtor sales cost $4200
Total into the house: $13,670
Now--you say that you guess the rehab to be $12k....sounds decent except you do need to figure out why you have mold. You can remediate it to a decent level but it will keep coming back if you don't fix the source.
Are you shure that the house will SELL for $60,000. The house may be worth $60,000 if you can leave it on the MLS for 6 months. What about if you wanted an offer within 30 days and close in 60?
My only other thought is that a 2br home throws a caution to me. They do sell but they must be priced very cheaply (only use other 2br comps!) and also stay on the market for a lot longer.
If you have given me worst reasonable case on the numbers here I like it. Otherwise give us a more conservative look at things and we'll advise from there. I always think that if things go as planned, i'll be happy; if things go better than planned, i'll be excited; but if things go worse than planned, it can potentially be hell.
GOOD LUCK
Excellent advice Myfrogger! Plan on 6 months hold time for carrying costs. ANything else is wishful thinking...
[addsig]
Hey, Myfrogger, where'd you get the 13k in the house from? If you add the purchase price of 28k to that, you end up with like $48460.00. If the ARV's only 60k, that's mighty skinny. Wouldn't take much for that mold to eat that up.