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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Deal analysis Posted by Gary on May 15, 2003 at 8:19 PM In Reply to: Re: Deal analysis posted by Ernie on May 10, 2003 at 8:33 AM Ernie: I'd get the guy to flip it to me for the $10k (or less) and then I'd use investor money and pay that investor a percentage (see private or hard money). Let's say it costs you 6 pts & 15% interest. You need to borrow to pay off the 2nd, rehab, taxes and holding costs ($28k from Ward's calc). Since that will take you over the 70% LTV that money guys will max out at or $140k. With a 1st of $120k, you can borrow up to $140k or $20k. Pay the rest from your HELOC ($8k). Let's check it out: 1. Balance of the remaining 1st = 120,000 2. Payment of arrearage on 1st = 2,000 3. Payoff of the existing 2nd = 15,000 4. Probable delinquent property taxes = $2,000 5. Guestimate on rehabbing costs @ 5% of resale value = $5,000 6. Turnaround time of 6 months X 800 monthly payment on 1st = $4,800 7. Contribution towards your resale buyer's closing costs = $2,000 8. Resale commission of 6% = $12,000 9. Your resale transactional expenses (title, termite, etc.) = $4,000 Profit: $200,000 sale less $10,000 seller/flipper $166,800 costs of items 1-9 above $2,700 private money (pts + 6 mo. interest at 15% on $20k) $200 5% interest on $8k (HELOC) Unless I'm missing something, that's a profit of $20,300. Not bad for $8k out of your HELOC. Now, who else profits? Agent = $12,000 Seller/Flipper = $10,000 Private Investor = $2,700 You = $20,000 Now there's extra profit in there if you're willing. For example: 1) Use discount broker that will list for $300 and pay buyer's agent 3%...savings = $6,000 2) Use your HELOC instead of private money....savings = $2,200. 3) Sell in 3 months instead of 6 if it's a decent seller's market...savings=3 mos of holding costs. Bottom line, I'd do it and crank the profit up to $25 - $30k. That's a pretty good return on your investment. Just make sure you do your due diligence, especially since you are new to the neighborhood. Best of luck. Gary : Ward, : Thank you very much for your help. You gave me many things to : think about which a newbie like me doesn't know. The deal : is now not looking nearly as good as I originally : thought. I really appreciate your assistance. : Ernie Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : Ernie: : I'd get the guy to flip it to me for the $10k (or less) and then I'd use investor money and pay that investor a percentage (see private or hard money). Let's say it costs you 6 pts & 15% interest. You need to borrow to pay off the 2nd, rehab, taxes and holding costs ($28k from Ward's calc). Since that will take you over the 70% LTV that money guys will max out at or $140k. With a 1st of $120k, you can borrow up to $140k or $20k. Pay the rest from your HELOC ($8k). : Let's check it out: : 1. Balance of the remaining 1st = 120,000 : 2. Payment of arrearage on 1st = 2,000 : 3. Payoff of the existing 2nd = 15,000 : 4. Probable delinquent property taxes = $2,000 : 5. Guestimate on rehabbing costs @ 5% of resale value = $5,000 : 6. Turnaround time of 6 months X 800 monthly payment on 1st = $4,800 : 7. Contribution towards your resale buyer's closing costs = $2,000 : 8. Resale commission of 6% = $12,000 : 9. Your resale transactional expenses (title, termite, etc.) = $4,000 : Profit: : $200,000 sale : less : $10,000 seller/flipper : $166,800 costs of items 1-9 above : $2,700 private money (pts + 6 mo. interest at 15% on $20k) : $200 5% interest on $8k (HELOC) : Unless I'm missing something, that's a profit of $20,300. Not bad for $8k out of your HELOC. : Now, who else profits? : Agent = $12,000 : Seller/Flipper = $10,000 : Private Investor = $2,700 : You = $20,000 : Now there's extra profit in there if you're willing. For example: : 1) Use discount broker that will list for $300 and pay buyer's agent 3%...savings = $6,000 : 2) Use your HELOC instead of private money....savings = $2,200. : 3) Sell in 3 months instead of 6 if it's a decent seller's market...savings=3 mos of holding costs. : Bottom line, I'd do it and crank the profit up to $25 - $30k. That's a pretty good return on your investment. Just make sure you do your due diligence, especially since you are new to the neighborhood. Best of luck. : Gary : : Ward, : : Thank you very much for your help. You gave me many things to : : think about which a newbie like me doesn't know. The deal : : is now not looking nearly as good as I originally : : thought. I really appreciate your assistance. : : Ernie Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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