Posted by Matthew on August 02, 2007 at 08:27:56:
Has no one considered the land being a majority of value VS improvements??!That might be why the costruction loans fallout. I would need more details on where in NJ and breakdown of property (land VS home) for a real valuation
Can U help evaluate this deal - Posted by Richard
Posted by Richard on August 01, 2007 at 20:59:39:
The house needs everything! The house is unliveable right now.
There have been 2 appraisals, $240,000 and $260,000 - majority of it in the land.
ARV around $325,000-$350,000.
Can sign it around for $175,000 - and there’s talk that the bank may even go lower because more and more things keep popping up that need to be done on the house…
Figuring about $80,000 to $100,000 in work needed. I’m not looking to make a killing (obviously), but also am still working on how to evaluate a deal.
I’d really appreciate some feedback from the experienced pros here.
Is this deal a deal? Is it to skinny?
Any thoughts on how to get the bank to go even lower?
Thanks for any advice.
Re: Can U help evaluate this deal - Posted by dannj
Posted by dannj on August 06, 2007 at 13:05:42:
Have you tried assigning this to someone else to fix? There are tons of sweat equity buyers here in NJ.
Re: Can U help evaluate this deal - Posted by JR_FL
Posted by JR_FL on August 02, 2007 at 04:55:59:
Well a lot of uknowns here. But from what I am reading its skinny.
I ran it using hard money at 65% with 5 points at 13% 6 months to get it rehabbed and sold which is very consertive. I came up with a number of 127K max price. That would give you about 45K net profit.
Re: Can U help evaluate this deal - Posted by LK
Posted by LK on August 02, 2007 at 03:34:56:
With only the information given, this would be my analysis:
ARV (conservative) = $325,000
Commissions/Holding & Closing Cost = -$35,000
Repairs = -$100,000
Profit = -$50,000
Max Purchase Price = $140,000
There are other factors that may increase that purchase price. Re-analyzing the comps and repair estimates could lower your cost, thus raising your max. purchase price. If it is a very desirable property and I thought I could get a faster sell at the ARV price, I may lower my profit, raising the max. purchase price. It always help to see the property and know the area well, but the calculator doesn’t lie.
Re: Can U help evaluate this deal - Posted by Bill Jacobsen
Posted by Bill Jacobsen on August 02, 2007 at 01:47:13:
Most on this site and many authors of investment books use the old (ARV X .7) - repairs formula. Turn the formula around and solve for the % of ARV. Using the most conservative numbers you would have: % = (Buy Price + Repairs)/ARV. The answer is (175,000 + 80,000) / 350,000 = 72.9%. If you use the higher repair cost and lower ARV you get an answer of 84.6%.
For me, the deal would work with the conservative numbers but not the higher. I hope this gives you a start with your evaluation.
Bill
Re: Can U help evaluate this deal - Posted by michaela-CA
Posted by michaela-CA on August 01, 2007 at 21:14:31:
what’s the deal with the land? Can it be subdivided into several lots? Can you sell the house by itself and sell the other land separately? How big is the house? The most I’ve ever put into a house was 100K and that was a gutted victorian, which got a lot of extra treatment. What’s your strategy? Wholesale? Then it’s too skinny. Are you planning to rehab yourself? If so, would you need hard money? That could cost you a lot.
Maybe the rehab isn’t as expensive as you think?
There are a lot of ‘ifs’ that may or may not make htis on ea deal.
Michaela
Re: Can U help evaluate this deal - Posted by Richard
Posted by Richard on August 01, 2007 at 21:26:03:
Land can’t be subdivided. Would sell, rehab and then put on the market. I received bids so that’s how I know approximate fixup costs.
Hard money would be great. This is in New Jersey? Know any HML?
Been approved 2 times through a bank as a construction loan, but it falls apart at closing. Not sure why, they just won’t do the deal.