Flip Deal Analysis Opinion - DFW, Texas

[David Schulwitz]

Hello BP, 

Considering making an offer on this property for a flip. The area has great schools and a warm market, so I'm feeling conservative and confident regarding the ARV. I would be using a Hard Money Lender to do the deal - they loan 70% of ARV at 14% and 2 points, $275 appraisal fee. These are NOT wrapped into the loan. If I get my offer accepted, I have a 3 day option period to get my GC in there to make a more formal estimate of repairs. As of now I have toured the property, and explained the scope of the project to him over the phone, as well as sent him photos, etc.

This place is a total mess on the inside.  It is a full gut job.  The exterior brick is in good shape, but other than that, there will need to be repairs/rehab done to the roof, foundation, floors, walls, etc etc.  Some of the Air Conditioning system might be able to be used, but I'm sure a lot of HVAC will need to be rehabbed as well.  Because of how extensive this project is, I've allotted $30/sq ft, which comes out to just over $71,000 in renovation costs.  My GC thinks he can get it to a great retail finish with 55-65k, but I'm trying to be conservative by saying 71k.  

Related question for more experienced flippers:  What do you usually end up spending on utility bills while the rehab is happening?  I was going to say $300 a month for all utilities...but that was just a rough estimate.  

The deal --> https://www.biggerpockets.com/calculators/shared/105390/8799483b-e188-484b-888a-0c92a9ee3556

Thank you ahead of time for your honest opinion and happy investing.  

Dave

[Sarah Nowak]

Hey David, not sure what your first question is...if you're wondering whether or not your per square foot estimate is reasonable, its hard to say. It really depends on the quality of finishes you're going to use because prices can vary wildly. For example, you could pay as little as $2.50/sq ft on flooring or as much as $25. I assume you'll keep the cost as low as possible but just thought I would bring it up.

For the loan, I've seen lower than 14% on hard money so let me know if you want some recommendations.

As for your related question, in my opinion, it's best to ensure that all utilities are on for the duration of the project so you can spot/diagnose potential issues as well as simply for convenience. Of course this will vary for each property and time of year but $300/month is a reasonably conservative number and in most cases you'll come in well under that - probably closer to $200.