Rental Property Investor · Bethalto, IL · Member since 2014 · 319 posts · 103 votes
so ive done a couple drive-byes. (The lgeal kind with no weapons involved). I've talked to the listing agent. I've looked at pics online (of the house of course). This place needs a ton of work. Its a foreclosure. It had a bad mold issue. 50% of the demo has been done. It needs everything. Blank canvas inside. Needs roof, siding, driveway, etc. My plan has been to buy and hold but this could be the perfect flip. Bank wants around 50k. Property fixed up could be worth 125-140ish. So if I like it what type of offer should I make? Ive never made an offer on a bank owned fforeclosure. I would have to get the price down...but how much can I offer without the bank saying take a hike? How hard is mold removal if the inspection says there is still an issue? any thoughts and opinions are appreciated. A lot of the rehab work I can do myself, fyi. This will still probably need at least 40k to rehab. Could be much more if the mold is still an issue. Just looking for some opinions before my walk thru
Longview, TX · Member since 2012 · 368 posts · 131 votes
11y
With the work you outline and ARV you list, $50K won't get it done. The only saving grace to me would be if other major mechanicals are in good shape - HVAC, electrical, structural. Even then, rehab is expensive and you'll find discovery behind the demo yet to be done. Don't forget to account for the potential ARV hit with buyers when you disclose conditions like mold. Best of luck!
Investor · Fort Wayne, IN · Member since 2014 · 1k+ posts · 515 votes
11y
@DJ Cummins I make stuff like this happen all the time. I am getting a house off the demo list. Get your bids, including from a mold person, make your bid with no inspections, no contingencies except clean title. No legal advice, just my .02 it seems to work for me, obviously it will be a much lower offer but just do the numbers and stick to your guns.
Second, I will ad this to his 2c...Reverse engineer your offer from your comps as follows:
1 - Start with your comps 2 - Subtract your profit (if there's no profit, why bother). This can also be the spread you need for refinancing. 3 - Subtract and accurate rehab...NOT AN ESTIMATE. In other words, don't use the words, "if, should be, could be, or I think". Get number on lf, sf, # of and the big one, the mold.
4 - Subtract any closing costs/fees/back & future taxes/misc. 5 - Subtract any partner sharing, but you can also add any partner participation here. ....and the answer is =
Your Offer. Don't be embarrassed. If you're not concerned about making money, then rationalize the number your just came up with. If you want to make money, adjust down your number to give you room to negotiate...but, that IS your maximum number.
Longview, TX · Member since 2012 · 368 posts · 131 votes
11y
With the work you outline and ARV you list, $50K won't get it done. The only saving grace to me would be if other major mechanicals are in good shape - HVAC, electrical, structural. Even then, rehab is expensive and you'll find discovery behind the demo yet to be done. Don't forget to account for the potential ARV hit with buyers when you disclose conditions like mold. Best of luck!
With the work you outline and ARV you list, $50K won't get it done. The only saving grace to me would be if other major mechanicals are in good shape - HVAC, electrical, structural. Even then, rehab is expensive and you'll find discovery behind the demo yet to be done. Don't forget to account for the potential ARV hit with buyers when you disclose conditions like mold. Best of luck!
I agree here, right up to the statement about "good luck when you disclose the mold...".
I have found that, if the mold is severe enough and it needs professional remediation, you will also need it certified. That certification makes this house better than the house next door that never had mold. I find that can be a selling point.