Help On Quick Review For Important Rehab Cost Factors:

I'm a new guy and trying to evaluate some wholesales in my area before I step into the rehab arena. This is an actual house for sale in my area through a wholesaler. Would there be any major costs I'm forgetting about here? Am I correct in assuming that the profit margin is borderline not worth the work for this?


Property Cost ($62,000.00)
Buyer paid Closing ($2,000.00)
• Holding Costs
mortgage payments ($1,920) ($480 * 4)
insurance ($240.00) ($60 * 4)
taxes ($700.00) ($175 * 4)
utilities ($440.00) ($110 * 4)
• Rehab Expenses ($13,000.00)
• Selling Costs
seller closing costs ($750.00)
realtor commissions ($5,700.00) ($95K * .06)

Total Costs: ($86,750.00)
Selling Price $95,000.00
Profit $8,250.00

Taxes on Profit ($2,227.50)

Final Profit $6,022.50
[ Edited by joefox on Date 06/18/2004 ]

Comments(5)

  • davezora18th June, 2004

    double check your insurance costs. if the property is vacant during rehab you can't get conventional insur. it will be more costly than this.

    Dave

  • jam20018th June, 2004

    Man, that's MUCH to thin of a deal. Add probably 40% to the rehab costs, just on general principle, then decrease the ARV 10-15%, just on general principle, and you may have the real costs. In my experience, MOST wholesalers I've known pad the ARV, and decrease the rehab costs to make the deal more attractive.

  • pholahan21st June, 2004

    How do these numbers look:

    ARV $95000
    Buying costs -2000
    Holding costs -3300
    Rehab costs -13000
    Selling costs -6450
    Contingency (5%ARV) -4750
    PROFIT -10000
    -------------
    MAX purch price $55500

  • Craigthecubfan28th June, 2004

    so basically a rehabber has to pay half price for a home? Man, that's gonna be tough to find delas like that.

  • jam93728th June, 2004

    I have only rehabbed 6 homes so far, but my average is 15k per rehab. I only buy a rehab if I can see 12-15k in the numbers. This way if I get hit for 2-3k of unforseen work then I still make a good profit.

    I bought my current rehab for 31k, put 35k into it rehabbing it and will have about 7-8k in acquisition/holding costs. Its listed for 110k and should sell for 105k. I should walk away with close to 25-30k on this one. So I bought for 30% of ARV.

    This is not typical though, I usually buy at 20k, sell for 50k and walk away with 15k after everything. 20k would be 40% of ARV at 50k

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