An Investor thought they could make $30k profit on a potential house flip, but they were wrong!
I saw a guy ask a question on the BiggerPockets forums ask about a potential deal he had found.
He thought he could purchase the property for $260k, put $30k in renovations into the property and then resell the property for $330k and walkaway with a $30k profit.
The problem is he grossly underestimated his 'additional costs" (buying, holding, selling & financing costs)
He mentioned he had only assumed "additional costs" of $10k-ish for closing costs, points, interest, etc) in his analysis.
I chimed-in and said that I was concerned that his ‘additional costs’ seemed extremely low and that this property looked like a bad deal!
$24k & 6 Months of Time Saved by Not Buying a Bad Deal!
I ran his deal through our Flip Analyzer tool and there was actually only about $6k in profit in the deal.
If the investor would have bought this deal they may have wasted 6 months of their time flipping a house only to make $6k ($24k less than anticipated)!