First Rehab Deal - Twin Cities

[ROBERT DEHAVEN]

Hi all -

I'm new to the REI world...Eager, but with realistic expectations. I've got many of the basics down (I think). Started an LLC, working with a realtor, have a few leads on contractors, etc.

We've made one offer, but they took another based on our having an inspection contingency.

I was hoping to get some feedback from folks more seasoned than me on 2 items:

1) Inspection Contingency: For rehab deals, is including an inspection contingency usually going to be a deal-breaker? In our first case it was a short sale so potentially it was more detrimental in that scenario vs. a lender owner property.

2) Deal Analysis:Based on where I am seeing volume and on where we live, it is looking like our first deal will probably be a rambler type property, 3/1/1 when we purchase..and probably 3/2/1, or perhaps 4/2/1 when we relist.

I'm anticipating when one finally pops for us, we'll acquire it for about 100k, with ARV around 190k. The following assumptions also apply:

- 6 month hold from buy to resale
- 6% realtor commission
- Hard Money loan @ 4 points + 15% APR interest w/9 mo. balloon
- Rehab of ~ 35K

After accounting for some closing costs and other holding costs, my model is showing a "probable" pre-tax gross profit of about $12K, with potential upside to 25-ish if we only hold for 4 months, nail the rehab budget with no overage, get the list price, etc...

Do these numbers smell right to other folks? Would you do deals like this "all day long" or wait for something sweeter?

Thanks folks...great board here!