Toby, a first-time investor, found a distressed house for $120,000 with $80,000 in repairs needed and an estimated value of $315,000 after renovation. Banks rejected it for failing livability standards, but a potential funder agreed to finance the deal because they evaluate the finished property, not its current condition.
Hey Toby, this is my first time doing this. This house is bad, like really bad.
It's old, hasn't been touched since the '70s. It's got rusted plumbing, it's got cracked windows, it's got roof leaks, the whole thing.
Well, you're not scaring me yet. So let's talk about the numbers, see what the deal really looks like, and we'll get dive into it. So what is the purchase price, the scope of work, and the ARV? What do you have on that?
Well, the purchase price is $120,000. $125,000. And I'm thinking when you're talking the scope of work, you want my rehab numbers, which is $80,000. The comps in the area came out to about $315,000.
So the first thing, you know, that actually looks really, really good, but you mentioned this is your first deal. Is that right?
Yeah. No other flips under my belt. The bank wouldn't even consider it. They said it doesn't meet livability standards. It does not have HVAC. It It does have foundation issues.
Well, that sounds like a really perfect deal for us because this is what we do. Banks want turnkey deals. They want to be able to know that that as-is value today is something they can invest in. We don't. We look at that after-repair valuation. So you'd really fund this deal?
Even if I'm new?
Absolutely. If your contractor is legit and the scope of work is solid, yes.
Man, I thought this was a total long shot. It's ugly now, but I see the potential.
We fund potentials, not perfection. Let me underwrite it. We'll get this deal funded
