Pls help this newbie with rehab computation & negotiation

[Jona Santiago]

Hi BP family. We were under contract for a property near Corpus Christi, Texas (1 SFH and a 3plex); 3736 sqft. There was termite infestation in both homes but the seller won't budge when we ask for repairs so we cancelled the contract. Now, the seller reached out to us offering to pay some of the repair costs.

Purchase price: $210K

Repair costs: $48K ($20K for siding, $4300 for leaking pipes, $9K for termite fumigation, $15K to replace flooring)

ARV: $275-$300K

Monthly Rent: $3550

Property Tax: $4774

Home insurance: $5628

Maintenance/Cap Ex: $5K

Property Management: $4100

Please let me know how you would handle the renegotiation. Do you think my numbers make sense? We are happy with just a cash flow of $150/unit. I will really appreciate any input and may God bless y'all for your kindness.

Jona Santiago (Austin, Texas)

[Jim Cummings]

@Jona Santiago. If you know the SF for flooring, you can buy (I recommend) a product called Luxury Vinyl Plank (LVP). You can find it at Lumber Liquidators, Lowe's Home Depot, other flooring stores, etc. Cost will run from about $1.00 - $3.00 Per SF, dependent upon the thickness and style you choose. Anticipate paying around $2.50 - $4.00 per SF to have installed. You'll also need Quarter Round to complete the look. Best price I've found recently is at Lowe's in the bundle package.   

You can also price the siding at any of the big box stores. Measure one exterior wall and estimate other from there to get a ball park costs. If you plan to keep the buildings - suggest you use a Hardie-Plank siding. I had a SFR redone with Hardie-Plank last year and it costs about $18,500 for the job, to include some gutter work.

Negotiation: What do you think ARV is? Price you pay should be ARV Minus whatever part of repairs you are willing to absorb. Ideally your RE Agent can shed some light on this along with a sense of how motivated Seller is to Sell.

Reach out with any other specific questions you might have.