Calculating My Potential Profits

[Brandan Roland]

Hi Everyone, 

I am a  brand new 25 year old investor and I just purchased my first property on last Monday to flip. We began working on last Friday. Although I am extremely excited I am also extremely nervous. 

I've used several different calculators to calculate my potential profits. I am not sure if I am doing it correctly. I will put all of the details below and also attach a image of my Settlement Statement. If anyone one with experience can help me out with this when you get a little time, It would be greatly appreciated. 

Financing through Sherman Bridge 

Terms: 

-12 Months Interest Only Payments 

-80% of cost 

-Holding back 80% of Rehab ( 20% is self funded)

-Interest Rate 10.99% 

-2.75 Points 

-$1100 Processing Fee 

Purchase Price $105,000

Rehab Cost $78,950   Estimated Completion 80 days

$31,662.36 out of pocket. 

See attached Settlement statement 

Any help or suggestions are greatly appreciated. 

[Steve Vaughan]

I didn't see your expected timeline (at $44/day interest) or ARV, so extra hard to estimate profits.

Be sure to reduce your ARV 10% for realtors and closing costs and after-inspection concessions.

Be sure to account for your silent tax partners- 1) Uncle Sam federal taxes & FICA SE taxes,  and 2) Your state dept of rev taxes, if any.  I would just estimate all of it at 30-40% depending on your tax bracket to be safe.

I've never seen a (hard money?) loan GFE and settlement statement before, so thank you for posting that.  Surprised there wasn't a fee to disclose all the fees.  LOL. Must be baked-in to one of the numerous processing or inspection fees.

Lender's ins prem POC of $1164 + regular lender's insurance seems like a real bonus to you.  Holy cow. Just one of the many gotcha add-on fees I see, but I'm no borrowing pro. 

My total closing costs on my last (blessed to be able to do) $90k cash buy were $417 all-in (not including property insurance POC) just for perspective.  And that was through a title co, not a hood of the car quitclaim deed. Hopefully someday you will be there, too, and can avoid all of this. 

Anyway, I hope this deal goes well for you and you update us along the way. When is the buy scheduled to close? When is the reno scheduled to finish? What is your anticipated ARV? Thanks!