Good Deal?? Charlotte Property

[Daniel Ramirez]

Hello BP Friends,

I'm going to post a house that I currently have under contract and include all data points that I have. I have deemed this to be a "good" deal and have the intention to proceed, but am hoping you all can help punch holes in my analysis. In other words, any help pressure testing this would be much appreciated. I tried to go conservative and buffer some numbers with cushion.

Property Info: Single family house, 2Br/1Ba, 860 SQF. Lot size is .22 acres, corner lot, in a very hot neighborhood. Every other house is being rehabbed or has been rehabbed. Schools in district are rated 8 & 9 out of 10. The plan is to expand the footprint of the property into a 1,500 SQF 3BR/2BA house. Comps within a 4 block radius (freshly rehabbed) have sold or are selling in the range of $300,000 - $340,000. 

Data Points:

101 Latham Place, Charlotte
Purchase price - $116,000
Buy Side Closing Costs - $5000
Total Rehab Cost Budget - $100,000
Total Financed Amount (purchase + construction costs) - $190,000
Estimated time to Rehab: 5 Months (based on conversations with multiple GC's and Architect)

HML Cost to Borrow Interest - 10,000 (12% rate on 190,000 borrowed across 5 months)
HML Cost to Borrow Points - $7,000 (3.5% on 190,000)

ARV - $310,000

Exit Closing Costs - $3,500
Staging Company to Sell - $3,000

Holding Costs (utilities, taxes, insurance) - 2,750

The Total Rehab Costs is based on what I believe to be a reputable GC who has experience flipping in this neighborhood. I've walked a previous project of his and has high quality finish. The scope of that project was very similar and was $110,000, but he emphasized that there were multiple issues with that particular property. This project is essentially a complete gut that will include addition of roughly 700 SQF, new roof, siding, landscaping, privacy fence, hardwood flooring installation, interior re-design into an open concept floor plan, upgraded kitchen with granite counters, new cabinets, stainless steel appliances, etc. High grade finishes in-line with existing neighborhood finishes. The $100,000 rehab cost includes all permitting, inspections, etc.

All in, I am estimating gross profit (pre-tax) of $35,000 - $40,000.

Let me know your thoughts folks! 

Dan