Buying 2nd Rehab

[Danny Day]

My 1st rehab is complete and currently leased (cash flowing $650 per month, appraisal came in $12k over my estimated ARV, might sell next spring) and I am ready to start on deal #2.

BiggerPockets had a lot of great advice on my 1st flip. I made a lot of rookie mistakes, one of the greatest being that I wasted much idle time on the deal. I gave my general contractor too much slack and not enough incentive to finish the deal on time.

This time around I've got 2 deals I am submitting offers on. I will not be using a GC, I will not be buying via wholesaler, and I will not be spending any money out of pocket until its under contract.

Here are the details of my deals:

#1 - 3/2/2 - Built 1991, brick on 3 sides
ARV - $110,000 (verified by comps)
Purchase price - $61,500
Rehab est. $10,000
Time line for rehab: 2 weeks max
Rehab level: Minimal
Rehab description: Sheetrock repair, paint (interior only), carpet, new range hood, basic landscape, remove door inside
Total equity capture BEFORE SALE: $38,500
Less purchase cost: $3,517 (3.8% plus inspection fee & insurance)
Less holding cost: $4,500 ($1,500 PM fee, 3 months of holding)
Less selling cost: $3,300 (3% of ARV)
Total profit: $27,183

#2- 3/2/2 - Built 2006
ARV - $82,000 (verified by comps)
Purchase price - $42,650
Rehab est. $10,000
Time line for rehab - 2 weeks max
Rehab level: Minimal
Rehab description: Remove room addition for garage, add garage door opener / rails, install laminate wood floors living room, carpet 3 bedrooms, paint interior, basic landscape.
Total equity capture BEFORE SALE: $29,350
Less purchase cost: $2,800 (3.8% plus inspection fee & insurance)
Less holding cost: $4,500 ($1,500 PM fee, 3 months of holding)
Less selling cost: $2,460 (3% of ARV)
Total profit AFTER SALE: $19,590

I budgeted 3% for selling cost because I am a licensed agent. If they need a home warranty or closing cost assistance obviouslly those numbers will slightly adjust.

I am also paying a project manager to manage the rehabs of these deals. $1,000 per job, on site every day with status updates to me.

Your feedback / opinions are welcome as always...

Danny

[Steve L.]

Your selling costs seem way too small to me.

On this type of property I would imagine you would provide 3% commission to buyers agent, 3% concessions, home warranty, and sales escrow/title fees?

What is your actual cost of funds? You mentioned $1,500 per month in both? On you are outlaying 60k versus 80k same cost? You also have nothing for miscellaneous.

Both of them are good deals, if your numbers are correct. I would do #1 with the information I have as it is the same amount of work for more profit.