My first flip - analysis, tips, suggestions welcome!

[Bruce Clark]

I have some buy and holds and am relatively comfortable in that space. However, I am attempting my first flip. I am partnering with a friend who is a general contractor (with an accounting degree). I found the deal and I am going to work on the financing. He is going to manage the construction, monitor the budget, and work with a realtor to sell the house upon completion. We are being very conservative with the numbers.

ARV $175,000 (I have done research on realtor.com and zillow. Based on my research, this number is very conservative. Actually a similar house only two blocks away sold for $200k just two days ago. I have also asked my realtor to pull comps and give me his opinion, and I am waiting on that.)

Purchase price - Asking is $52,000. I offered $45,000 this morning so we will see.

Rehab costs - $59,000 (This is very conservative as well. We have both run the numbers about 20 times.)

I think this is going to be a good deal for us. What does everyone think?

Also, it is not under contract, but if/when it is, I will need to start securing financing. I have never had trouble financing buy and holds though my local bank, but I am nervous about approaching them with a flip. Also, I have no experience with hard money or privatelenders. Any comments, suggestions, pointers are greatly appreciated. 

[George Taylor]

Hi Bruce,  

As far as hard money is concerned. A lot of us will work with someone with no fix and flip experience but will also factor in other REI experience. More than likely you will be looking at about 15% cash at closing plus closing costs. That is based on around a 70% ARV loan at 12 months, 12% and 4-5 points. We don't lend in Ohio but those are some general rates Also be aware that any HML's will require you to order an appraisal through them, which are lender specific and are usually around $500. Avoid ANYONE asking for an upfront fee besides an appraisal or BPO, and those are only to be ordered after the terms are agreed on by both you and the lender. Any other basic questions you may have about HML's go ahead a give me a shout and I'll be more than happy to help out.