Potential Deal II - Flip To Buyer

[Dave Gibson]

Guys,

I'm simply not going to give up locating a good deal for my buyer. I met w/ my buddy (REO agent) last week and he took me to one of his homes. 3BR/2BA (20yr. old home), rancher w/ deck (needs work), two car, decent community, good schools, close knit comm.. Hasn't been listed yet...agent and I are friends, but business is business and he wants to see if I can deliver. The numbers are below. Did I miss anything? Please let me know:

ARV - $120k
PP - $42.5k (also includes DP, CC, Insp., LF, RE Comm., and Appr.)
Repairs - $11k (this includes a 15% markup and addition of SS kitchen appliances – always my recommendation)
HC - $1440 ($480mo x 3[Avg. DOM], Taxes, Insurance, Utilities)
Selling Costs - $9900 (RE Comm., CC, Warranty)
Wholesale Fee - $5k
Total Cost - $69,840k
Sell below market @ $110k
Potential Profit - [b]$40,160
[/b]

63% ARV

Keep in mind that I can save him some commission cost due to me being an agent.

P.S. Spent most of this morning putting up more bandits signs and speaking w/ folks that are still responding to my rent-to-own signs that I put up a couple of weeks ago.

[J Scott]

If those numbers are accurate, sounds like a great deal. A few things to keep in mind:

- Make sure the ARV is accurate. Don't take anyone's word for it...verify the comps yourself

- Why do include a wholesale fee in there if you're selling to an end-buyer?

- Are you confident in the rehab costs? 20 years is the typical life span for roofs and mechanicals, so if the house is 20 years old, you may need to replace those, which could add $7-10K to your rehab costs. If you don't replace these, keep in mind that the inspector may flag these things.

- You assume three months of holding costs. Remember that if you plan to sell to a first time homebuyer, they will likely be going with an FHA loan...selling in less than 90 days FHA can be a challenge. I like to assume at least 5 months of holding costs, though my average DOM is 102 days...so if I save on holding costs, that's a bonus.