Renovation Insights

@brrr_beth

Equity 215·Posted 1w ago

As a seasoned landlord, I've worked with numerous contractors and vendors in the Lexington area. Recently, I had a contractor share a project breakdown for a fix-and-flip investment. The numbers were intriguing: purchase price of $120,000, rehab scope of $40,000, holding costs of $15,000, and an after-repair vlaue (ARV) of $200,000. Projected net profit was around $25,000. While the numbers looked promising, I cautioned the contractor to consider local market trends and the importance of thorough property analysis. In the current Lexington market, we're seeing a surge in renovations, which may impcat ARV. I advised the contractor to carefully evaluate the property's condition, neighborhood, and resale potential to ensure a successful project.

1 comment

@txrei_pro·1w ago

I'd like to drill down into the financials of this fix-and-flip project. The projected net profit of $25,000 seems reasonable, but I'm concerned about the expense rtio, which appears to be around 33% of the purchase price. What's the breakdown of the $40,000 rehab scope, and are there any potential risks or contingencies factored into the holding costs? Additionally, how did the contractor arrive at the ARV of $200,000, and what comparable sales data supports this valuation? In a market with a surge in renovations, it's crucial to ensure that the ARV isn't inflated. I'd also like to know more about the financing structure for this project. Was the loan sized to the cap rate, and if so, what's the expected cash-on-cash return?

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