Investigating First Flip - Numbers Check

[Michael Verkruyse]

Hi all, new to the real estate investing arena but interested in starting. I’ve doing some research around my area for potential properties with needs for cosmetic/moderate improvements that I could flip, and I believe I’ve found one. I’ve done some analysis with the numbers below, and I was wondering if anyone could validate if there is anything blatant that I’m missing? Appreciate the help in advance.

[Larry Turowski]

@Michael Verkruyse It doesn't look like a slam dunk, but this would be your first deal.  If you have very high confidence in all your numbers and good justification for that confidence, then it looks like a decent first deal.  I'd mitigate the worst case by not going over $150K on purchase price.

Also, it looks like you have some money, so even in worse the worst case scenario, you could sell and sustain a loss without sinking.

In the expected case you will invest about $200K and earn about $20K, a 10% ROI. Not great, but if you can turn it quickly, not bad.

[Michael Verkruyse]

Appreciate the response @Larry.

In this case I'm pretty comfortable with the comps, $240,000 is actually the low for the area/size with an average in the $270,000 over the last 6 months. I've just started talking to my realtor from my primary residence purchase (my only RE experience to draw on) to verify my comps are reasonable. The deal becomes far more palatable with a larger spread.

I'm not overly concerned with making a killing on this first deal (although obviously it wouldn't hurt), I really am looking at it as an opportunity to get some hands-on experience, and to enhance my ability in assessing repair costs and my knowledge of the local market. My day job is analytically oriented, so by nature I won't make a deal unless I'm sound in the numbers; at the same time I've seen it mentioned here numerous times that the biggest recommendation is to start making actions.

Hope your week is going well as we approach Thanksgiving, and as always thanks for the advice!