1st Flip Property

[Muhammad Saqib]

I am currently exploring the avenues to finance that property and renovation budget.


offer price 255,000
Renovation 35000-50,000

Project turnaround time 2-4 month after the closing

ARV 349,000

2911 sq ft property

Please guide me through the finance option we have the.
Thanks

[Jeff S.]

Before you make an offer on a property, @Muhammad Saqib, you should have a vetted process in place to determine if it’s a good deal. If you don’t have one, which seems apparent, you are not yet ready to make offers.

When we are presented with the numbers on a flip, until verified by us, we always use the maximum rehab costs and minimum ARV. If the rehabber keeps changing the numbers to make the deal work, we know they have no basis. This is a red flag. That is, why would you not use your worst-case estimates if they are credible? Your min $30k and max $50k rehab costs now have a $20k spread!!!

In addition, a 2-month turnaround would be tough for an experienced rehabber. Sorry, but it defies all credibility for a newbie.

No lender should touch this property, Muhammad. You will lose money. See below for an estimated P&L. Talk to some local experienced lenders and successful flippers and learn their lending and buying criteria. Perhaps partner on your first deal. An experienced lender will have a spreadsheet they can review with you.

You can't spend more than $211k for this property. This will result in a $38k profit, or 11% of the ARV.

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