Advice Needed From Experienced Rehabbers - Posted by Mark (Atl)
Posted by Mark (Atl) on January 23, 2002 at 15:12:34:
I’ve located what I think is a good property and wanted to get some advice on my numbers, as well as the best way to structure. I’ve renovated two homes that I lived in but this will be the first as an investment property.
House is in a good neighborhood (my neighborhood actually) and will retail for about $300,000 with a first class renovation job.
I estimate renovation costs to be $65,000, conservatively.
Owner is elderly and has a “small” loan balance- realtor won’t tell me how much. I want to present two offers to them- one for “all cash” and one for short term owner finance.
The first scenario I’m looking at is using a hard money lender, in which case I’ll have to fund about $30-40,000 of repairs out of pocket, based on their max of 65% LTV. I figure my max purchase price would be $130-135,000.
The second would be a small down (10%)with the owner carrying back a mortgage at competitive rate. This would be about $80-90,000 out of pocket which would require a partner of a home equity line. I figure max purchase price of about $150-155,000.
I’m running these numbers with a profit of $45,000, which I figure is reasonable given my time and money.
Any feedback on these numbers or suggestions on another way to structure the deal? Thanks in advance for your help. I appreciate all the real world knowledge I’ve gained reading excellent posts over the past few weeks.
By the way, my first choice would be to cash out of my house tax free and buy this one. However I’ve been informed by my wife that, after living through the renovation of our house, if I did that I would be moving alone.