Need insight on flip deal!!

[Joshua Buchanan]

Hey everyone on bigger pockets, i was hoping to get some input on a flip deal. Theres a house in really great neighborhood selling as it. Looks like just tlc stuff. They are selling for 69900. Arv is prob 100k. Its a forclosure. I think banks usually want 85 percent if im correct. It was just listed today and already an offer on it but seller has 48 hours to accept so im going to view it in the morning. Im not sure on repairs yet but my guess is its probably not more than 10-15k. I was think on offering $59,559. I would need to get hard money to be competitive and close quickly. What do you think about this deal?

[Jake Adams]

That deal sounds a little tight at those numbers. Here is an example if you get your offer accepted at proposed purchase price:

Purchase Price - $60K

Repairs - $18K (need to have budget for unexpected items)

Closing Costs - $900

Carrying Costs (depends on taxes, HOA, Insurance, etc.) - $1500 estimate

Interest and Points from Hard Money Loan at 2 points and 12% for 4 months (this is a good deal) - $3600

Selling Costs at 6% of list price ($100K ARV) unless you are licensed - $6,000

Total Money in deal - $90K

Net Profit - $10K (11% cash on cash return)

What happens if your repairs are more than budget? What happens if it takes an extra month or two to sell? What happens if you can't sell at your ARV and need to lower the price? What is average days on market in your area? Do you have a good relationship with an agent that can list for you at a discount?

You only have $10K profit in the deal and that is just one mistake away from losing money.

My suggestion is to try and get the deal closer to $50K or double check your repairs and maybe they are closer to $10K. Have you done any fix and flips before?