Up to $450k profit on this deal

[Gabriel Jeroh]

The property is located at 19 Carriage Hls, San Antonio, TX 78257 in a desirable neighborhood of the Dominion. The property is in need of cosmetic repairs. The home is being purchased for $579,000. There are 6 bedrooms and 7 bathrooms. The home was built in 1991 and has 7,109 square feet of living space. The lot is .77 Acres. 

ARV: $1,300,000
Rehab: $200,000-$250,000
PP: $579,000

Estimated Gross Profit: $451,000- $501,000

Comps:

55 Champions Ln Sq. Ft: 5,187   Sold Price: $1,300,000

15 Montivillers  Sq. Ft: 5,968   Sold Price: $1,460,000

18 Montivillers Sq. Ft: 7,432   Sold Price: $1,025,000

[J Scott]

Originally posted by @Gabriel Jeroh:

Clearly you havent seen the PDF flip report I asked you to download or maybe you dont get ...so please click the link below to see the BP Flip calculator analysis report and let me know if you still have questions.

 

I saw it.  What I'm saying is that I don't believe it.

You've gotten a single bid, which doesn't give me much confidence that your rehab estimate is accurate.  In fact, when I looked at your breakdown of costs, I noticed that your very first line item had the roof at $0.  Has the roof been replaced in the past five years?  I doubt it (given the condition of the rest of the house), in which case the roof is 24 years old.  While your contractor may have told you that the roof is in good shape, I'd be willing to bet that the buyer will insist that your replace the 25-year old roof when you go to sell.

Next, I looked at your carpentry budget -- $3500.  That's ridiculous -- fixing that main staircase and banister could easily cost that much.  You could spend another $10K just on baseboards and trim in that house, and that's not in the budget.  Plus, I could easily imagine another $10K in carpentry work on the interior and exterior just from the obvious stuff in the pictures.

At least two of the rooms have mold (based on the pictures).  But, I don't see anything in the budget for mold testing and/or remediation.  Have you done any testing yet?  Are you planning to disclose the mold to the end-buyer?  Assuming so, they'll most likely do their own mold testing...I imagine you'd like to know what that test will reveal before you start work.

Speaking of mold, why is so much of the sheetrock and cabinets pulled down in the first place?  Was there water intrusion?  Fire?  Something else?  Whatever it was is likely to have caused other issues that you haven't yet found out about.

There's nothing in the budget for demo or trash.  I'm guessing you have a couple thousand dollars in dumpsters to trash out, plus the labor.

What about windows and doors?  Not a single one needs to be replaced?

You have $15K for HVAC.  For 7000 square feet, that seems low.  If the house was built in 1991, there's no doubt you need to replace the furnaces, condensers and the coils -- and I imagine you need at least three 3-ton units (and possibly more for that size).  Unless you go with a very low-end manufacturer, you're almost certainly looking at a good bit more than $15K.

Does the budget include permits?  Inspections?  Engineering fees?  Architectural drawings?

Do you have a full scope of work for this project?  Did your contractor work off that scope of work, or did he create a scope of work as part of the bid?  I'm guessing he created it, and he clearly missed a lot of stuff.  If you created it, you missed a lot of stuff.

As for your fixed costs, those seem low to me as well.  On a $640K purchase in Florida, your title insurance costs alone will be about $3200-3500.  That doesn't include any transfer taxes, title fees, closing charges, government fees, etc.  On the sale, you don't include anything for concessions; and while I don't know how title costs are split in Florida, .5% seems like it is probably low for seller title/closing charges.

Lastly, I still don't think any of your comps are reasonable.  The comps are all newer than the subject property, they are about a mile away and they are all a good bit smaller than the subject.  Why didn't you use similarly sized comps that are closer?  I'm guessing the answer is that you couldn't find any...which should give you an indication that you're rehabbing the nicest/biggest house in the neighborhood.  Generally a recipe for disaster.

Anyway, it's clear from your responses above that you're not interested in feedback or advice...which means you probably stopped reading this a long time ago.  But, hopefully others will be able to glean something from this post, and it wasn't just wasted time.

Of course, if you're right that this deal should generate $260K on a $1.3M ARV, then you should have buyers lined up to buy it. If that's the case, feel free to ignore my comments...