Updated almost 12 years ago on . Most recent reply
Deal to be evaluated
Hello All,
My name is Rhoan and I am new to BP and need feedback on evaluating this deal I found in my area. A brick colonial estate in desirable town with excellent school system (selling for $266,000). The estate currently has a reverse mortgage of 266,000 to pay taxes and bills since the original owners died. The current seller (son) said he'll sell it to me for whatever FHA appraises it for. Last appraisal was for 225k, from a deal that fell apart. If I can get FHA appraisal below 235,000 I can have it but cash only. Please let me know what you think about this deal below. Thanks. Here is the detail below. Looks like a profitable deal but is it really from an experienced professional viewpoint?
Here's my worksheet
Cash purchase $225,000 ( FHA est. appraisal)
Est repairs. $100,000
Fees(points,insp)$5,000
Insurance $. $1500
Carry cost $10,000
(6 mnths)
Realtor fees $5,000
TOTAL COST. $346,000
ARV( comp). $500,000
Profit potential. $154,000 ( 50/50) split.
Town appraisal at $522,200
Town Assessed at $366,000
Bldg sq ft 9762
Most Popular Reply
As Joel mentioned, the estimate for real estate commissions are too low. They will probably be $25,000 to $30,000. I assume that holding costs include property taxes.
Based on you ARV and rehab cost my estimate of profit would be $90,000 to $100,000. Based on my requirement of 20% I could buy up to $243,000.
Congratulations on finding a good deal.
Bill