I posted a few days ago, and was scatterbrained all over. Didn't get any real responses either.
Well now I have seen the house, done my comps, and trying to estimate repair cost so I know if I should or shouldn't make an offer.
30 year old house, 1635 sqft, 3 bed 2 bath, driveway only, pretty poor condition (Old laminate floors and stains on plywood under carpet and smells a little). New heater in attic, water heater newish, A/C will need to be updated sooner or later but doesn't look bad.
I have 4 comps that are blocks away all sold within last 6 months, most expensive one being close to the lake and farthest away. I used @J Scott guide to estimating ARV and brought the comps to a comparable quality of what I have intended for the rehab. 2 only needed 1-2k in adjustments, then there was a higher one and lower one that needed about 8k each after comparing similarities. I got some of these numbers using percentages or what I would see the house being valued if it had/didn't have some of the upgrades. Also, I 3 blocks away from this house so I am pretty close on my comps since I have been looking in this area, mostly for my own house, for over 3 years.
The Avg ARV bewteen the 4 came out to 220K, I also took the average $SP/SQFT from the MLS for each and averaged for $128/SQFT or ~210K. We can use the lower one for our estimates.
So 210K, If we look at 70% rule that is starting out at $147000 minus repairs
Hard Money loan that I will be applying for gives 65* of ARV so $136000 lending power.
My plan is to flip it if the equity capture is there, my fall back is to rent it out.
To flip, I still need the repairs this is a rough estimate of what I have without being able to go in with a contractor (I got to go look at it Sunday, the day before I went back offshore for 2 weeks). A contractor would be with me during the inspection period if I ever get that far. This is what I have so far:
Lets say I replace all of the rooms and living room w/ 10mm laminate from lowes at $1.79/SQFT at $0.99 install (I could do this myself or my wife could easily if we get a weekend during the rehab) Total = ~900*$2.78 = $2511
Kitchen and baths w/ tile at about $2.40 and $0.80 install is what they quoted me for my porcelain wood tile my my house so Total = ~220-250 = 235*$3.10 = $730
Floors Total = ~$3300 plus maybe $200 in prep?
New Appliances (Stove, dishwasher, microwave) do y'all provide these? In a rental I would, but a flip?
Bathrooms: 2 new tubs is I cannot get the others clean $1000, plus the labor and extra tile work probably running me 3K for something decent in both baths? All those faucets, mirrors etc if I don't build a frame out of existing mirror and molding would put me back another 2K. Total plus sinks, updated cabinets, fixtures, tubs = 6K min.
Paint: Everything needs painted inside and exteriour touched up. Exterior needs a good washing, but nothing is peeling to have to scrap a lot, so maybe 2000-3000K for ext, and interior another 1000 to $1500 for every room. Total = $4500
Decks: Need pressure washed and stained, I can do that( $200). Possibly build out the back deck just a few feet, do you have estimates for a 10x 10 area?
Roof: I did not see any wet spots from the roof under the main house and there was a downpour the day before. What I did see was a water damaged spot/couldn't get close enough to see if it was wet, where the back porch balcony is. You can go on the back porch and see that there was previous damage from leaking. So, to get it knocked out after I have a contractor inspect, but throwing it in my to do budget a new shingle room, square house, 1 peak. Total~ 10K hopefully over estimating that.
Insulation: Found traces of a critter living up there(feces) so would like to get all the insulation out of attic and replace, and also ripped up from underneath the house(Raised about 3 feet) and put spray insulation underneath. I am not sure on cost for this????
$2000 minimum I am sure with hiring someone.
Landscaping: Needs a few boards in fence(I have), mowed (6"-1ft high in some spots), maybe some stuff planted to make in look nice. $200
Random knick knacks (light bulbs, new lighting in some areas if needed) $500
Total = $26,900
Extra % for hidden cost? 20%???
Running total = $32,300
With that I have the $147500-32,300 = $115,000 if I stick with the 70% rule.
Looking at other comps at it's current condition(most around or below 100k but farther out of the popular area I live in) this is what I was originally thinking. I was thinking 110K before I ran those numbers.
So for the hard money, say 70% rule, $115K+32.5K = $147,500
65% ARV using conservative $210 is $136,000 leaving me $11,500 in repairs not including closing, lender points, and holding cost. Around 6K in closing, if I pay points on the back end that saves me ~$4100 up front, and my holding cost would be interest at 12% I believe so ~1360 a month. All 4 comps sold less than 2 months, but say 4 months holding = $5500
That is $6K closing + $5500 holding that I have to cash flow. Giving me a total of $23,000 out of pocket. Does this look right so far?
Then when I go to sale add realtor fee's (6%), plus my points, plus closing fees(3k?) totaling ~$21,000
So say I do get my $210,000 minus the $21,000 in closing, the $23,000 I put in for repairs and holding, and the original loan of $136,000.
That leaves me with $30,000 profit before tax all said and done IF everything goes as planned and my numbers are correct or over conservative hopefully.
Does this deal look correct/make sense?
Would you do this deal and put an offer down? Why or why not?
Appreciate all of the help!
