Need a Little Help and Direction

[Marcel Miller]

Hello all,

We are somewhat newbies to the RE investing world. My wife and I (both veterans) have had three properties that we have turned into rentals in the past but we have strictly used VA backed loans to accomplish this.. Our credit scores are over 740 and we have an LLC that we would like to use for our investing ventures.

So we have found a SFH in Lafayette, LA. The property is a REO that is listed at $39,900. It is a 3/1 with 1350 sqft and it is situated on .85 acres. It is structurally sound but needs a little bit more than a moderate amount of work. All appliances have been removed from the home. The home has ducting for air but the AC unit was removed as well. We will want to add a bath to the master and covert this to a 3/2. We will want to remodel the current bath as well. Besides this the home will need a total of eight (8) new exterior windows, deep cleaning, paint, new overhead fans and light fixtures. We have done a rough price estimate of the appliances, fixtures, AC, etc and we are looking at $6k for these items. We estimate no more than $25k in total for all rehab items and labor.

We have a local agent that has run comps for us on 3/2's with similar sqft (but less acreage) and these are ranging from $145k to $175k. We are conservatively estimating the ARV to be $130k to $140k. We have contacted property management companies in the area and we have determined that the average rents, for a 3/2, are about $1 per sqft (ranging from $1100 to $1300 per month).

We anticipate being to acquire the property for $15k to $20k (discussions with the agent lead us to believe the bank will accept an offer in this range). So we are looking at $20k purchase and $25k rehab for a total $45k upfront (plus closing fees). We have access to these funds personally but we would like to get some experience using hard money lenders (HML) but we really do not know where to begin. We have looked at HML's online but we have not gotten any responses back.

So:

Listed Price: $39,900

Expected Offer Price: $20,000

Rehab Cost: $25,000

Expected ARV: $130,000

Refinance Cash (at 70% ARV): $91,000

Repayment of Upfront Cash:  $45,000

Approximate Profit:$46,000

Any input would be appreciated.  Especially if we are missing something in our analysis.

Thanks all!