First Flip - Trying to Avoid a Huge Mistake

[Shelby Van Horn]

Hi there,

My partner and I are trying to find our first flip.  Although I have been following and learning from BP for years, we are both brand new to this, and I think we may be about to pull the trigger on a mistake, and I was hoping to get advice here before I cancel our offer.

The property is in the 30349 area of Atlanta.  

It is a four bedroom, two bathroom, split level house needing approximately $20-30k of repairs.

The purchase price is $177,500.  We tried to get it for closer to $160, and the seller wouldn't budge more than ~ $2,500.

Our realtor sent comps and has been assuring us that relisting for a minimum of $250k is realistic and creates a good profit margin.  Our offer was accepted yesterday, and our five day due diligence is supposed to start tomorrow.

From what I have thoroughly studied on the comps, they do sell within a decent time frame and for much higher than the purchase price, although the majority of comps are slightly larger in sqft. (They are all selling in the $260-285k range).

I'm sitting here trying to learn and absorb everything, and working on the rehab budget.  While we plan on doing a lot of the work ourselves, we are realistic with our limits and will need to hire much of it out.  After using a couple of deal analysis tools, I feel sick to my stomach that this may be a big mistake.  

We are using a hard money loan at 9.9%.  After analyzing the deal further, estimating holding costs, realtor fees, monthly costs on hard money, estimating the worst case scenario of it taking three months to sell (average time here is 43 days), rehab costs, insurance, etc., I am pretty sure we need to pull out.  I feel stupid for not realizing this in the first place, because if I did the 70% rule correctly, we would have to be *negative* $2,500 in repair costs to make it fit.

Am I missing something here?  Is this somehow a good deal and I am messing up the numbers, or should we run?

Thank you.