Advice on first deal

[Mark Lenox]

Hi, all. I am just getting started as a REI and could use some advice.

I got into contact with another local investor/flipper who also wholesales occasionally. He offered a property wholesale, with this deal analysis:

$150,000 Purchase Price

$25,000 Repair Costs

$225,000 ARV

also holding and transaction costs...

$30,495 Estimated Net Profit

First I told him that my capital is limited to $125,000, to which he replied he can help me get a hard money loan for the rest with no problems. (The above estimate included the financing for a hard money loan of $60,000). So... I took two potential project managers out to look at the property, both with extensive contracting/re-habbing experience. Both of them said the property needs well over $25,000 in repair costs and seemed to be more like $35,000. In addition, neither was willing to take the job because the property is at least 45 minutes away.

Now, the wholesaler is offering a different opportunity to me. He is proposing that I come in as the hard money/equity lender. I would hold a mortgage on the property worth my capital investment of $120,000. I would be paid 10% (annualized) interest or 30% of the profit on the deal, whichever is higher. I would also be involved in the entire flip from start to finish, learning all of the details.

From an educational standpoint, this sounds like a great deal. I get to be educated in REI from a pro while getting paid for it. I just wanted to get some feedback as to whether this sounds too good to be true.

Thanks in advance for your input!

Mark