Is this totally crazy?

Question

Asking price is $42k house needs everything almost

neighborhood is C+, likely would sell for $110-129

Needs complete kitchen, 2.5 baths total remodel, large amount of drywall repair, complete siding replacement, windows, lighting, garage door, flooring....

1400 sq ft, two story, layout is ok, but slightly quirky. Garage is 9 feet deep...why did they even put a garage door on this thing? Kitchen has a doorway to it with an actual door on it. Can remove door, but the wall is bearing the upper story, it is a decent size but definitely different.

This would be like new construction, except the roof and bones, trades rough would be done, repiped this year.

Yes this would be my first house. (before you warn me about how hard it is, I am an HVAC contractor) HVAC contractor status makes any project doable. I built a home from the ground up 12 years ago....that was hard, but I have learned a lot since.

I figure I have $43k in renovations. That makes total investment $85k. Really probably more like $50k in renovations....so $92k. Again, It may only be worth $110k after all that.  Buy and hold is my main concept.

Rent would be close to $995.

This local market is tough to find deals right now.

Charles Terrizzi · Answer

I think I would have to keep total purchase cost to no more than $42k ....rehab and holding cost $50k I'm pretty sure I can do it for that.

Since I plan on owning it for the next 30 years or more, It would profit me $238,350 over the next 30 years from my initial investment of $92k.

$7945 NOI yearly on $92k.

If I could do this ten times, I could bring in just shy of $80k per year, twenty times would be $160k per year. I know, brilliant math skills right?

I own a company that brings in high income to fund this. I will use some leverage.

Ned Carey · Answer

That doesn't sound like much of a deal to me. You haven't figured in costs to purchase costs to resell, carrying costs. Seems like a both a tight and risky deal.

That said, many good deals are negotiated not found. Asking price is not necessarily the sale price.

Jeff Robert · Answer

Have you had a chance to run the BP calculator for rental?  I'd be curious to see how it works out since it seems like you have most of the #s figured out..