Posted by Ed Garcia on December 29, 2000 at 11:28:33:
Lets look at your deal.
Asking price $145,000
If you were offered $140,000 would you take it? Of course, now were down to $140,000.
Sales commission of 6% is $84,00. Now were down to $131,600. Cosmetic fix up $2000.Now were down to $129,600. Holding cost, if we have to hold the house for just 4 months, now I usually pencil in 6 mo., because deals never go as planed and the average close is 45 days. So lets finance $115,000 at 10% for 4 mo., Cost of loan would be at least 2 points which is $2,300+appraisal+ title+ closing, so you’ll spend at least $4 000+ $3,834 for the 4 mo. holding. Now were down to $121,766. $2,000 for cosmetic fix up, now were down to 121,766.
Let me ask you Mike; is it worth going through all of this to make $6,766?
Exposing your self by financing it. That’s a question only you can answer. For me, I would either obtain a long escrow and assign my position, or lease option it to flip.
The reward, isn’t worth the risk,