SFR Is there a potential deal here?

[Todd Willhoite]

I have a lead, but I am going through my options and I am not sure if there is a potential deal here. This will be my third deal, so I am not very experienced and would like to hear from you. Please let me know if my thinking is correct or if you can suggest other options.

Property: A- neighborhood, with good schools, approx 1500 sq ft, built 2012, 3 bed/2 bath/2 car garage. Last 5 houses that have sold in the last two months: 2 sold mid 160k, 3 sold mid to low 150k, lowest sale 150k, highest 166k, one is on the mls right now for 159k. This is a cookie cutter neighborhood where all the houses are very similar and all by same builder. Estimated repairs $5,000.00, mortgage on house $126,000. Neighborhood rent $1,300 to $1,500. Probably will rent $1,400 after repairs. Prop taxes last year $2,100, HOA $360 for last year.

Flip option:

If I sell for $150,000

-$9,000 (6% commission)

-$4,500 (estimated 3% closing costs)

-$5,000 repairs

$131,500                                   Holding costs

                                       5% interest on $126,000 = $6,300 /yr = $525/mo

                                       Property Tax 2100/12=$175/mo

HOA 360/12=$30/mo

                                        Insurance $1,000 estimated/12 = $83/mo

                                         Utilities $200/mo

                                         Total $1013/mo

-$4052 (4 months of holding costs)

$127,448 Net sales proceeds

If paid what is owed on Mortgage ($126,000) then not really any profit for me, and no margin of safety.

On the above numbers I don’t see positive cash flow on a buy and hold strategy after considering insurance, property management, vacancy, capital expenditures and repairs. So buying subject to the existing mortgage (approx $650/mo) I am not sure will work.

I would think any appraisal would come in at more than the amount owed on the property, so I don’t think a short sale is possible.

Are there any other options I haven’t thought of? Am I making mistakes in my evaluation? Thank you.