Summit Equity Enterprises LLC · Deal Underwriting
Investment Memorandum
Summit Equity Enterprises
Acquisitions & Underwriting
2026 Market Edition
Hard Money Rate
9.5–13%
Origination Points
1.5–3 pts
Median Flip Gross
$65,300
Avg Flip ROI
25.1%
Phoenix Median
$481K
FHA Flip Rule
90 days min
August 31, 2026
01
Property & Exit
"You make your money when you buy." — Oklahoma operator$
$
HOA Property
Adds dues + assessment risk line
Target FHA Buyer Pool
Enforces 90-day hold minimum
02
Financing Stack
2026 rates: hard money 9.5–13%, points 1.5–3%
pts
mo
%
%
03
Acquisition Costs
Buy-side fees — wholesalers never factor these$
$
$
$
04
Renovation
"I miss stuff on every deal." — OK operator$
%
05
Holding Costs
Don't underbudget time.mo
$
$
$
$
$
06
Disposition
Sell-side costs — the second closing always surprises new flippers%
%
%
$
$
Deal Verdict
Kill It
$16,876
Projected Net Profit
Net Margin
2.4%
Cash-on-Cash
20.5%
Timeline
135 days
Max Offer · 70% Rule
$277,625
(ARV × 0.70) − rehab − holding − closing
You're paying $182,365 above the 70% rule cap.
Operator Checks
✓$15K profit floor — minimum to absorb surprises. Currently $16,876.
!20% net margin target — operator standard. Currently 2.4%.
!100% cash-on-cash target — capital efficiency. Currently 20.5%.
✗70% rule — max offer was $277,625. You're paying $182,365 over.
✓FHA 90-day rule — timeline clears the rule.
!Holding cost discipline — total holding is $70,119 (10.0% of ARV). Holding alone exceeds your profit.
–HOA assessment reserve — not applicable.
✓Rehab contingency — 12% buffer on $80,000 base. Standard.
✓Due diligence flags — 0 cleared, 32 still open below.
Operator Due Diligence
The financial model is only half the deal. These are the qualitative checks that 30-year operators run before they sign anything. Tap each item to mark Clear, Flag, or N/A.
DD Score
0 / 32
0 cleared · 0 flagged · 32 open
Location & Site
The unfixables — these change ARV and DOM, period
·
Not on major arterial / busy street
Heavy traffic streets sell 10–15% under comp. −10–15% ARV
·
Does not back to commercial / RR / freeway
Permanent buyer turnoff. Cuts buyer pool 30%+. −8–12% ARV
·
No high-voltage power lines overhead
Health-perception haircut even when irrational. −3–8% ARV
·
Floor plan is functional
No bedroom off kitchen, no missing closets, no walking through one bed to reach another. unfixable
·
School district matches comp set
Sub-7 GreatSchools cuts family-buyer pool sharply. −5–10% ARV
·
Not in flood / wildfire zone
Insurance kills the monthly payment math for buyers. insurance
·
Neighboring properties acceptable
Trashed yards and dilapidated neighbors cap your exit price. comp ceiling
Mechanical & Structural
The expensive surprises — verify or budget
·
Roof <15 yrs OR replacement budgeted
Buyer inspector WILL flag aged roof; insurance won't write old roofs. $7–15K
·
HVAC <12 yrs OR replacement budgeted
AZ HVAC replacement runs $8–15K. Don't inherit a 2010 unit. $8–15K
·
No Federal Pacific / Zinsco / Stab-Lok panel
Uninsurable. Fire risk. Must replace, ~$3K+. $3–5K + uninsurable
·
No polybutylene / galvanized plumbing
Polybutylene = denied coverage by most insurers. Repipe $8–15K. $8–15K
·
Foundation: no major cracks / settling
Step cracks in mortar = real settling. Get structural eng if unsure. $5–25K
·
Termite / WDI report clear
AZ subterranean termites are aggressive. Lender will require treatment. $1–8K
·
Post-tension cable slab verified (AZ)
PT slabs cannot be slab-jacked. Cut cables = catastrophic. specialty repair
·
Sewer line scoped & clear
Tree roots / collapse = $4–15K. Scope before close, always. $4–15K
Property-Specific Landmines
"Didn't see that coming" file
·
No leased solar (or assumable verified)
Leased solar disqualifies most FHA/VA buyers. Buyout often $20K+. kills FHA/VA
·
Pool: no resurface needed, fence compliant
Resurface $5–10K. AZ requires pool fence for liability/insurance. $5–10K + compliance
·
All additions / conversions permitted
Unpermitted SF counted by tax assessor but not by buyer's appraiser. comp loss
·
Has garage (or matches comp set)
Converted garage = ARV haircut and FHA scrutiny. −5–8% ARV
·
Septic age verified or city sewer
Failing septic = $10–25K replacement. Inspect tank pre-buy. $10–25K
·
No 1990s synthetic stucco / EIFS issues
EIFS failures from improper drainage = full re-side $30K+. $30K+
Title & Legal
The deal-killers — verify in inspection period
·
Title search clean (no liens)
Mechanic's, IRS, HOA, child support liens all attach to property. closing block
·
No open permits or code violations
Open permits from 2007 still cost you $12K to close out. $2–15K
·
Survey clean (no encroachments)
Garage 18" over property line = unsellable until cured. unsellable
·
Vacant or clear path to vacant by close
Tenant in possession + cash-for-keys + eviction = months of holding. holding bleed
·
If estate: all heirs signed / probate done
One missing signature = partition action = 6–18 months. 6–18 mo delay
·
MLS history clean (no repeat re-listings)
Listed 3× in 2 years with different agents = hidden issue. hidden defect
Market & Comp Discipline
Your ARV is only as good as your comps
·
3+ closed comps within 0.5 mi
Reaching beyond half a mile = appraiser will reject the comp. ARV unsupported
·
Comps closed within last 90 days
Stale comps = lender will discount or require new appraisal. appraisal risk
·
Active competition manageable (<5 in band)
Saturated price band = DOM stretches and you cut price. DOM stretch
·
Avg DOM in price band <60 days
Slow comp set = your holding cost balloons. Re-time the exit. holding cost
·
Buyer financing mix supports ARV
If 70% of buyers in band are FHA, your $700K exit needs different pool. pool mismatch
·
Unchecked · default✓
Clear · verified no risk!
Flagged · issue exists—
N/A · doesn't applyFull Cost Breakdown
Every dollar between purchase and sale, itemized.
| Acquisition | $464,940 |
| Purchase Price | $459,990 |
| Title / Escrow / Doc Prep | $3,200 |
| Sewer Scope | $400 |
| Property Inspection | $450 |
| Title Insurance | $900 |
| Financing | $67,035 |
| Origination (points) | $4,940 |
| Prepaid Interest (0.57 mo) | $2,816 |
| Interest over 12 months | $59,279 |
| Renovation | $89,600 |
| Base Rehab Budget | $80,000 |
| Contingency (12%) | $9,600 |
| Holding | $10,840 |
| Property Tax (12 mo) | $3,500 |
| Insurance × 12 mo | $2,160 |
| Utilities × 12 mo | $2,640 |
| Landscaping × 12 mo | $1,440 |
| PM Bonus + Listing Photos | $1,100 |
| Disposition | $47,699 |
| Listing Agent (2%) | $14,000 |
| Buyer's Agent (2.5%) | $17,500 |
| Buyer Concessions (2%) | $14,000 |
| Sell-Side Closing / Title | $2,200 |
| Buffer | $3,000 |
| Misc Unknowns | $3,000 |
| Total All-In Cost | $683,114 |
| After Repair Value (ARV) | $699,990 |
| Net Profit | $16,876 |
Plan B · Rent it instead
"On a small property I have a good amount of equity — worst case I just rent it. I'm not gonna take a loss." — Oklahoma operator
$
%
%
%
Monthly Rent$2,400
Vacancy / Maintenance Reserve−$360
Mortgage (P&I)−$3,671
Tax + Insurance + HOA−$472
Net Monthly Cash Flow−$2,102
Plan B fails — −$2,102/mo negative. You must flip this. No fallback. Either reduce purchase price or pass.
What this calculator encodes
Pace · Scottsdale loss
$10K projected profit will likely lose money. The HOA assessment alone was $10K. Pace flipped a deal expecting $9K profit and lost $5,400 when the HOA hit assessed the unit mid-renovation. Anything under $15K is too thin.
OK operator · 70% rule
(ARV × 0.70) − repairs − holding − closing. If your offer is above this number, you better have a reason. On a first deal, don't deviate.
All operators
You pay closing costs twice. Buy-side and sell-side. The buy-side line is invisible to wholesalers. Real spread is half what they quote.
Pace · capital stack
Hard money = 2 months prepaid interest upfront. Plus 1.5–3 points origination. On a $300K loan at 11% / 2 points, that's $11,500 in points + $5,500 prepaid before you swing a hammer.
FHA HUD 4000.1
90-day FHA flip rule is enforced. Clock starts on seller's deed recording. 91–180 days with >100% markup = second appraisal required. Excludes 30–40% of buyer pool on fast flips.
AZ-specific landmines
Solar leases kill FHA/VA buyers. Post-tension cable slabs can't be slab-jacked. Pool fences required. Synthetic stucco (EIFS) from 1990s fails catastrophically.