Simulation: a fictional property for practice.

A fix-and-flip at $210,000: is there really a profit?

A dated house is listed at $210,000. Remodeled homes nearby sell for about $340,000. Count every cost before you call it a deal.

A fictional house bought with a short-term hard-money loan. All costs and rates are example assumptions.

• List price: $210,000
• House: 3 bed, 2 bath, 1,600 sq ft, original 1990s finishes
• Your loan (example): 90% of the price plus 100% of repairs, at 11% interest-only and 2 points
• Your plan: Renovate in 4 months, sell within 2 more

Mission 1: What will it sell for after repairs?

Which sales would you use for the after-repair value (ARV)? Pick all that fit.

• Sale A: $345,000 (3 bed, 2 bath, 1,580 sq ft, fully remodeled, sold 2 months ago, same subdivision)
• Sale B: $336,000 (3 bed, 2 bath, 1,640 sq ft, remodeled, sold 3 months ago, 0.5 miles away)
• Sale C: $395,000 (4 bed, 3 bath, 2,200 sq ft with a pool, remodeled, sold last month)
• Sale D: $228,000 (Same model, original condition, sold 2 months ago)

Use sold homes already in the finished condition you’ll create, not bigger homes or listing prices.

Mission 2: The repair budget

Enter your repair budget before you see the example ranges.

• Kitchen: cabinets, counters, appliances
• Two bathrooms
• Flooring throughout
• Paint inside and out
• Electrical panel the inspector flagged

About $48,000 to $70,000. This drill uses $60,000, and a real budget should add a cushion for what you can’t see.

Mission 3: Every cost, not just the repairs

• After-repair value (ARV): $340,000
• 70% rule, a quick first screen: 70% of ARV minus repairs: $178,000 maximum price
• Purchase price: $210,000
• Buying costs (assumed 2%): $4,200
• Repairs: $60,000
• Loan points (2% of $249,000): $4,980
• Loan interest, 6 months at 11% (assumes the full loan from day one): $13,695
• Taxes, insurance and utilities while you hold it (assumed $600 a month): $3,600
• Selling costs: commissions and closing (assumed 8% of ARV): $27,200
• Total cost: $323,675
• Profit before taxes: About $16,300, under 5% of the sale price

The asking price is $32,000 above the 70% screen, and the full count leaves a thin profit. Any surprise, a slower sale or a lower price wipes it out.

At $210,000, what do you do?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.