Flipping property: max purchase price

[Raj Parwani]

I am going to look at a property over the Thanksgiving weekend. I have not seen the property except in the pictures and it seems that it will require about 70 to 80K in rehab costs. The property is listed for 300K and my estimate ARV value is appr 375K according to the comps that I have looked at. I would like to have a profit of 20K, with appr repair and selling time of the property of 5 months ( maybe it is too long). I have estimated additional costs of $45K ( along with the 4% RE Agent fee and 15% additional uunforseen rehab costs/closing costs). My Max Purchase cost is working out to be 235k. Am I estimating the fixed costs of 45K to be too high? In your opinion , what are my chances of getting the property for 235K since it just came on the market,?

Thanks

Raj Parwani

[Account Closed]

Originally posted by @Raj Parwani:

hi Kevin:

There are no properties around boston area that are 100k or less, unless it is a real dump and it will require extensive work which I do not want to take as my first project . I have full time job but maybe I can work with someone to gain experience, if it is possible to do in the evening . Thanks

 Its a matter of opinion. My personal opinion is based on what I have done and been through. My first deal was a cash deal. I didn't even buy a house, I bought a 900 sf condo for 40k. It had hoa dues of 200 bucks a  month. I would work my 8 hours, and then come to the condo and work some more. I went to home depot probably 40 times a month. sometimes 2-3 times a day if I really miss-measured..lol. but it was a learning experience. The condo was a dump, but I put granite counter tops in the kitchen, watched youtube videos on how to install tile and backsplashes. I re-did the bathroom to marble floors and I installed crown moldings. I could not hire a contractor because all my money went into the 40k to buy the place. I learned how to be a plumber, tile setter, crown molder, all in one yr that I owned the property. I sold the property for 180k with less than 1 yr of ownership. This helped my real estate investing career to a quick start. Not all deals will be like this, but the point is I started small. So thats what I always tell people when they are beginning. Now if this was your 5th or 6th flip, I would say just go ahead and do it. but forst timers is hard. buy a cheap condo, fix it and sell it. Get some experience and  confidence, even if you only net a little, but you will learn a lot with not having a 100k or whatever hanging over your head, it will be more like 30k or 60k. those numbers are more manageable if hell breaks loose. You know what I mean?