Rehab Possible Deal?
I'm a newbie investor and I wanted to runa potential deal past anyone who may have some advise on if it sounds good. I would appreciate any feedback.
FMV $88k
1st $79K
repairs $4-$8K
After Repair value $100k est.
The owner doesn't want anything down and just wants someone to take over the payments, which are $700 month.
I was thinking of trying to get this under contract and re-fe at 95%(83,600) and pay off the 79K first and use the $4,600 to make the repairs and holding costs (4 months x 500) of 2,000. Leaves me with about $2K+ to come up with for repairs. If I sell for 100K, I would just need to pay off the 83.6k and any repair overages.
I'm calculating about $10K profit potential. What am I missing?
Thanks,
Paul
That seems like a pretty thin deal to me. I'd ask the owner to make 3 payments(2100) (based on if they sold it conventionally it would take that long to close) to you and use that for as much repairs as possible, and use your own cash, credit card, personal loan for the difference until you can flip it.
Another possibility is to have the seller refinance and then take over the loan if that is what it takes. Try to not use your own credit for a mortgage (which by the way, you didn't figure closing costs into your equation) if at all possible.
Best of luck,
Andrew
Thanks Andrew, I appreciate the feedback. I will try to have the seller make 3 more payments and see if that works. Actually, the property is in Detroit.