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Updated almost 9 years ago, 03/06/2016

User Stats

39
Posts
8
Votes
John Ratigan
  • Investor
  • Berwyn, PA
8
Votes |
39
Posts

Does this flip make sense? Numbers inside. Thanks!

John Ratigan
  • Investor
  • Berwyn, PA
Posted

Hi guys, 

Assuming most points and highest rates: (Hard money lender offers 2-4 origination and 11-14% interest annualized. I'm assuming 4 points and 14 % rate)

Purchase price = 210k 

This particular lender requires I pay 20% of purchase price plus closing costs. They will fund 80% of purchase and 100% rehab. 

$2,100 X 4 (4 points) = $8400 (loan origination fee) 
$2,450 per month (14%) (interest monthly)

Closing costs = $8,400
20% down = $42,000
Cash needed to fund = $50,400

Purchase price = $210,000
Rehab budget = $90,000
After retail value = $339,00-$379,000

Cash owed to lender = $23,100-$37,800 depending on how fast I can sell it. (6months-12months numbers) 

So basically my costs are 300,000 to buy it and rehab it, plus about 25k to 38k back to the lender. I am all in on this house for 325k-338k, with the possibility to sell it for 340k to 380k. 


If sell for 339,000 after one year, break even
If 339,000 after 6 months, make $15,900

If sell for 380,000 after 6 months, profit = $55,900
If sell for 380,000 after year, profit = $41,200

I appreciate any math wiz's (lol) who stuck with me through that. Do you guys like the deal? Would you offer less (maybe 190k instead of 210k) and roll the dice? 

I am really inspired by so many of you and appreciate your input. it is highly respected. Obviously if i didn't have such high interest payments, it would be a no brainer to do the deal. It's the interest payments that are making me worried. I believe my math is correct.

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