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Updated about 8 years ago on . Most recent reply
Is This A Good Beginner's Flip?
So I'm working with a wholesaler to find my first flip. He said this is a good beginner deal. My estimates are as follows. Part of me says this is the best beginner flip I'm going to get, and the other part says the margins are too tight. What do y'all think?
$200,000 ARV
$105,000 less purchase price
$11,000 less purchase closing costs *inc. compensation to wholesaler
$50,000 less rehab costs
$7,300 less holding costs (estimating 4 months)
$5,500 less sales closing costs *inc. commission
$178,800 TOTAL Costs
$21,200 GROSS PROFIT
OUT OF POCKET EXPENSES
$10,500 10% Equity per Hard Money Lender
$11,000 Closing Costs
$21,500 TOTAL Out Of Pocket
CASH ON CASH RETURN
$21,200 / $21,500 = 98.6%
Most Popular Reply
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@Asim Alam , a 1% sales commission is jumping over dollars to save nickels. You may save in commissions paid, but you will more than make up for those in holding costs.
Budget 6% for selling commissions. This is not the place to cut corners.
Is your rehab budget based on hard quotes, or is this just a guesstimate? $50k can easily turn into $75k. EASILY.
Make sure you have good solid numbers.