Hey guys…looking for any advice on analyzing a deal and making an offer. Some background, I made the decision to try to get into real estate investing about a year ago. I’ve analyzed ~100 properties and made about 20 offers…with no luck. I’ve taken a critical look at my risk tolerance to see if I’m being too conservative. I’d say I have moderate level of risk tolerance, but if the numbers don’t make sense…they don’t make sense.

I wanted to break down my latest offer and see if anyone can give me some feedback on my offer…I may be missing something. Here goes:

Property details: 3/1 SFH, ~1000 SF in Tulsa OK. The neighborhood is blue collar Midwest neighborhood. There are some recent flips close by, there are some well maintained properties and there are a handful of homes that need some love.

This house needs some love. It needs a new roof/soffit/fascia, new windows, paint throughout, bathroom upgrade, 2’x3’ hole in the master bedroom ceiling from water intrusion, refinishing of hardwood floors, new HVAC/Furnace. A decent amount of cosmetic repairs aside from the roof/windows.

I’ve estimated $48K-$53K in repairs.

Asking Price: $130K.

ARV Comps in the area: looking back over the last 6 months, ARV comps range from $140K to $165K. The comps on the lower end were properties that were well maintained but weren't recently updated. The comps that were hitting the 160-165K mark were complete refreshes.

My strategy/offer: I planned on making this a BRRRR invest, hoping to leave minimal cash in the deal. I offered $85K cash and planned on using either a construction loan or a 401K loan to fund the rehab. For the sake of my example, I'll assume 401K loan to reduce my holding costs during the rehab.

85K purchase + 50K rehab + 1K holding (taxes/ins) + $4K refinance = $140K

Assuming I hit the mid-range for ARV I used $150K appraised value.

Refinancing at 85 LTV = $127.5K….so I'd leave ~$13K in the deal.

Total monthly expenses (mortgage/taxes/ins) $1,049 + (5% vacancy $60) + (5% CAPEX $60) + (2% MX $24) = $1193

Rental Comps in the neighborhood are $1175-1200/month

Sooo, I'm barely cash flowing with my numbers. If I do hit the full ARV of $165K, I'd leave $0 in the deal, but I'd be losing ~$100/month. Am I missing something in my analysis? I've made multiple similar offers on different properties but never close the deal. Any advice is greatly appreciated.

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