Please look at my numbers! Advice needed!

[Ryan Johnston]

Hey BP Community,

I've been analyzing deals to flip for over a year now. I've heard multiple people say that whenever a deal comes on the market you should analyze it to get familiar with the process. I only get this far into it when I'm about to put an offer on the house. My concerns with these numbers are that the total Closing/Lending Costs are way to high. To give you some background on the house:

• 3/1 listed for $62,500 with comps around $125k-$135k
• Major reno items include: new HVAC/new kitchen/new bath/new floors/possibly new windows. Lots of DIY because its my first deal.
• It's a HUDHome that will go quick if I don't act today. My realtor actually advised me that if I want it I need to offer a little bit higher than asking.

I've been analyzing deals for some time now and I've only come across a couple of deals that actually work with these high closing costs. The closing costs are 12% of the final sales cost! As a note, the Closing/Lending Cost are for the buy and the sell. I'm not seeing a way to get a deal going and I'm becoming discouraged.

Could someone please tell me if these numbers accurate assuming my ARV and Estimated Cost of Repair are correct? I'd be happy to take any recommendations as well!

Thanks BP!

[James C.]

Ryan,

I'm not familiar with your specific area. Your estimates look reasonable to me. 

A few questions

1) Why are you building in broker fees on the buy? Your purchase should include the real estate fees, even on a HUD property.

As a general note, I would bid what my business model suggests, and don't chase an asking price, even if your broker says to. It's not their neck on the line. If they want to JV with you, and provide the cash, then they have a say, otherwise tell them what you are going to bid. If they balk, find someone else.

2)Why the MLS fee? For 5% it should be included. See above about brokers.

3) Is it possible to cut a deal with your title company for round trip costs? 

You might want to put a finer pencil on your rehab costs, or reduce your bid price. 

If you are frustrated, you need to go find better deals, or change up your strategy. 

HUD deals are way too easy, and accessible. Everyone and their mothers uncle can bid on them. There is too much cash in the system at the moment, and financing is a hindrance, not a help for public deals.

Hope that helps.

Good Luck!

Jim