Deal or No Deal??

[Robert Shadley]

OK this post is more out of frustration of our local and I guess my inexperience (only a couple flips under my belt) than anything but I would like some help with the analysis..

I got a tip from a friend that knows a couple that had a property in a nearby town that they intended to flip (but never finished).  He got a big promotion and has to move the family out of state ASAP, so they need to dump the house.  Its structurally sound and stripped down to the studs.   I called them up and they said they would let it go for $6,500!

I'm thinking home run until I ran the comps.

First-  The market is still terribly stagnant in our rural area.  Comps 65K-100K (None completely remodeled)

Numbers

1600 Sq/ft  3-2

Purchase-  6.5K

Remodel-   60K

Additional- 9.5K

TOTAL-      74.5K

At this price I would need to get at least 100K for it which is at the top of the comps.  It is extremely frustrating to be able to find a deal like this and still not be able to feel confident in the flip.  What do you guys think?

Thanks

Rob

[John Horner]

I have never put $60k into a rehab, even in the best areas.  I would never ever consider doing a $60k rehab on a house where the comps are $65k-$100k.  Not sure what "additional" includes but remember cost of holding, financing, utilities, taxes, etc.  Then make sure to subtract realtor fees, closing costs for you and the buyer and any concessions from the sale price.

If you could rehab for $30k that'd be a sweet deal, otherwise I would walk.