Is this a deal? - Posted by Kim

Posted by JT - IN on June 30, 2001 at 06:59:47:


A $25 to 30K rehab, is a big rehab, on a $ 95K ARV property. How did you arrive at these numbers? did you have a pro rehabber look this over?

Assuming your numbers are correct, you are definitely in the ball game here. As ageneral rule, you want to purchase at not more than 65% of ARV; you are at 68% if repair costs are $ 25, and at 73% if costs run 30K.
Now after adding you 5 grand to flip to a rehabber, you are further depleting the percentages.

Best to be sure that your numbers on rehab are accurate, cause that is usually the downfall of most of the deals similar to this; underestimating what repairs cost, which eats away at profits.


Is this a deal? - Posted by Kim

Posted by Kim on June 29, 2001 at 23:55:57:

I have a 3br/1.5ba single family ranch with a motivated out of state seller. ARV about $95,000. Repairs $25,000 to $30,000. Offer $40,000. Nice neighborhood. The seller is elderly, owns the home free and clear and just wants rid of it. This is my first deal and I need help. I want to flip this house but if I want about $5,000 out of it does that leave enough room for my rehabber’s profit and closing costs for myself and the seller? If rehabbers profit is $15,000 (which seems great to me) is it worth it to them or do they generally expect $20,000 or more?

The home does not have central air and I’ve included that in the repair costs to the best of my knowledge. Can anyone confirm the avg. price to install central air. Home is already vented for forced air furnace? Also, the home is a 1200 sq.ft. ranch? What is the ballpark cost for vinyl siding? Please don’t laugh at my ignorance. Help!!

Re: Is this a deal? - Posted by Ronald * Starr

Posted by Ronald * Starr on June 30, 2001 at 10:34:58:


JT-IN is correct. You need to know the repair costs accurately. Not just because they can be too big, since that is the more usual problem for a beginner. But because you could be too high and thus miss a good deal. You don’t indicate how you arrived at that figure, so it is hard to evaluate how accurate it is. As JT-IN says, that is a BIG amount for rehabbing a house.

Of course, a contractor might charge something like that to do the work you envision. But a rehab person can probably get the work done for about 40-60% of what a contractor would charge.

The things you have asked about can be quickly ascertained by calling a few companies locally. In Sacramento, CA, to put in a new heating/air conditioning system in a 1400 sq ft house would be about $6K to $8K, according to the people I called up. In CA only a licenced person can buy a airconditioning system, so I can’t install it myself.

Good InvestingRon Starr**