Conventional Rehab Loans

[Richard Xiong]

I’m looking to purchase my first flip in Fresno, Ca with a Conventional Rehab loan.  I’ve consulted with an experienced realtor who works with local investors and he suggested using a Conventional Rehab Loan with 20% down.  

What are the pros and cons to using this loan strategy?

Below are rough calculations I've done using excel formulas on an actual listing I found in the MLS. Feedback would be greatly appreciated.

List Price $110k

ARV $160k (est area comps)

Max offer $90k on property

Est Rehab $30k

Total Loan $120k (purchase + rehab)

Down Payment $24k based off total loan

Estimated closing costs at 5.5% $6,344 (avg closing costs are 3.5-6%)

Mortgage amortized 30y at fixed 4.6%

Mortgage payment/tax/insurance $639.81

Holding costs for 3 month rehab and 2 month closing $4,937

Net Profit after paying back leveraged Down Payment, loans, and expenses $13.5k