Sometimes It's Right Under Your Nose - Flip Analysis Help

[Shawn Torsitano]

Hello Everyone!

I moved into a new area a few months ago, into a standard little neighborhood for my area. Whole bunch of 3/2, ~1,400 sqft houses, built in 1977/1978. Today, while the wife and I were doing misc. work outside, we started talking to a neighbor across the street. That standard, super great, old guy who takes immaculate care of his house and knows everything about the neighborhood. As an aside, yesterday he was vacuuming out his exterior light fixtures.

Well we found out today that the house next to him had been vacant for the last 3 years. Grass is always cut, so it never crossed my mind. Apparently the guy who was in it died 3 years ago. Not sure about specifics, but there was a reverse mortgage. Could have been some will related stuff. Regardless, an entity out of Texas called "MORTGAGE EQUITY CONV ASSET TRUST 2011-1" now holds the deed, and based on the public records and the paper taped to the front door, the foreclosure proceedings finished last month. Googling the mailing address of that entity, I got a company called Nationstar Mortgage.

What I'm wondering, is one, is my breakdown of costs accurate? And two, I am going to contact the company tomorrow, do companies like this ever sell a house like this without taking it to auction? The house is in fairly good condition, all things considered. Needs a new roof. About 2/3 of the siding has already been upgraded from T1-11 to hardiplank, so the remaining would need to be updated. Interior would need a pretty significant cosmetic renovation(all new flooring, paint, cabinets, etc), but I'm highly confident that there aren't structural issues that would need to be addressed. When in doubt, I went with mid-high cost estimates from The Book On Estimating Rehab Costs, and when in doubt I also assumed it would need to be replaced(like some drywall). Some of the work I can do at cost, I own a painting company and have a general contractors license. A few of my guys have some general construction background. The only thing that I bid at cost is painting, because I know for sure that is something we can do.

Cost breakdown is copy/pasted from the BiggerPockets calc. ARV is based on a few houses within a stones throw that have sold in the last 2-3 months. One of which is a house about 4 houses down the road, about 100sqft larger than this one, sold for $215,000. It was far nicer than other houses around, as it had been updated, but it still had a fair amount of 70's stained cabinets, trim, and doors. My closing costs may be a bit low, but that is at least countered by me being an agent(licensed, but never did anything), and realistically I can waive my commission when selling.

According to the data you provided, you can afford to offer $113,424.00 to make a profit of $30,750.00. This is based on an ARV of $205,000.00, a rehab budget of $35,380.00, and holding costs of $7,896.00.

See the full analysis below for more data.

Financial Summary for Flipper

Financial Breakdown

Purchase Costs

Purchase Price:	($113,424.00)
Purchase Closing Costs:	($3,250.00)
Total	($116,674.00)

Rehab Costs

Total Rehab Costs:	($35,380.00)
Total	($35,380.00)

Holding Costs

Monthly Holding Costs:	($1,974.00)
Total Days Held:	120
Total	($7,896.00)

Sales Costs

Sales Price After Fix Up (ARV):	$205,000.00
All Selling Closing Costs:	($2,000.00)
Real Estate Agent Fees:	($12,300.00)
Total	$190,700.00

Total Profit for Flip

$30,750.00

Flip Hypothetical Profit If Held For...

45 Days	90 Days	270 Days
$35,685.00	$32,724.00	$20,880.00

Estimated Repairs

Exterior Repairs Roof$4,500

ConcreteN.A.

Gutters$300

GarageN.A.

Siding$4,000

Landscaping$500

Exterior Painting$1,680

SepticN.A.

Decks/PorchesN.A.

FoundationN.A.

Interior Repairs Demo$1,300

Sheetrock$500

Plumbing$2,100

Carpentry / Windows / Doors$2,000

Electrical$1,000

Interior Painting$1,800

HVAC$3,000

Cabinets/Tops$5,000

FramingN.A.

Flooring$2,500

InsulationN.A.

General Components Permits$200

TermitesN.A.

MoldN.A.

Miscellaneous$5,000

Total Repairs: $35,380.00