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Rehab Deal Analysis

perfecto profile photo
  • Wednesday, July 14, 2004 @ 03:19 AM EDT
  • 4 Comments
Owner is motivated to get out of landlord business. Here are the details: 1) ARV=$175K 2) Purchase price=$135K 3) Repairs and carry costs=$10-$15K On those numbers...seems marginal. Now...consider these financials: 1) 1st mortgage at %75 ARV, 6.75%...no points...low closing costs 2) Lender pre-qualifes the re-fi. If you do the rehab you promise to do, the re-fi is almost automatic. 2) lender requires re-fi in 6 months 3) Seller will carryback $25K...1 yr...no interest...no payments 4) I kick in $3K at closing seller pays for the rest of my rehab and carry costs 5) I'll re-fi for $175K in 6 months and still have access to my sellers free loan for another 6 months. Heck, I can buy at least one more house with that! What do you all think?
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  • chuck1933
    chuck193313th July, 2004
    0
    Reply

    no good

  • MicahM
    MicahM13th July, 2004
    0
    Reply

    chuck, why is it no good? Did you run the numbers?

  • perfecto
    perfecto13th July, 2004
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    Reply

    Yeah Chuck. Why no good?

  • MicahM
    MicahM13th July, 2004
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    Reply

    perfecto,

    I am not a pro, so take my posts lightly.

    I just ran the numbers for the fun of it. I see that you will have $21,250 available for rehabbing, but it will only cost you $15,000. You put up 3k at first but you just got that back plus $3,250. Very nice, imo.

    I also see that for the first year your payments will be about $2475/month, and after this year you'll pay about $390/month. (Correct me if I miscalculated.)

    What do you plan to do with the property once you've aquired it? Can you profitably afford the $2475/month for the first year?

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