Would you jump on this deal?

Question

Hello! I'm still in the learning phase. We recently moved to Atchison KS and I've been looking at KC a lot. I won't have access to money until after the first of the year, so this deal will be long gone, but I'm just wondering if it looks like a good bet for a flip or a buy and hold? Maybe someone here can benefit?

https://www.realtor.com/realestateandhomes-detail/6105-E-148th-Ter_Grandview_MO_64030_M82993-40098

Jim Adrian · Answer

It really depends on rehab cost.  If we assume there is 1700 sf of space being renovated to cover unfinished spaces like garage and storage rooms.  At $40 per sf = $68k or using $50 per sf = $85k for reno cost.  Using Zillow there is 1400 sf of finished space and rent at $1100.  As we know Zillow can / is wrong at times.  As a by and hold its looser or break even at best that if you can $1200 (aggressive?) for rent.  If you find a way to cut $25k out of the rehab then its becomes positive at $100 a month.  This assumes you buy it at $40k.  Zillow list this at $99k home value and $850 rent but a $1000 of the area.  Taking this a face value and know nothing of the area.

Edith TenBroek · Answer

Thanks @Jim Adrian, this is exactly the kind of help I'm looking for!

Matt K. · Answer

From my link

Full finished basement with a 4th non-conforming room in basement

And unless you've verified the other house... very well could be the same. But either way look at the price point and time on market.

Edith TenBroek · Answer

Good info... re comps, this is 4 bedroom.  No 4 bed comps for the area.

Matt K. · Answer

2 seconds on redfin....

https://www.redfin.com/MO/Grandview/6206-E-150th-T...

Bigger, not destroyed and you can actually see it. Based from description alone I'm guess it'd take more than 30k to get your house to match this houses condition. I'm also willing to be you can get the linked house cheaper than list...I'd also be highly doubtful you'd get 90k ARV based on this :

06/15/17

Price change

$76,000-5.0%

$40

RE/MAX Realty ...

05/31/17

Price change

$80,000-5.9%

$42

RE/MAX Realty ...

04/05/17

Price change

$85,000-4.5%

$45

RE/MAX Realty ...

02/28/17

Listed for sale

$89,000

$47

RE/MAX Realty ...

Matt K. · Answer

That's not the issue, it's the fact that it literally says in the ad "not for the faint of heart". If you were an experienced flipper, than this would be a different conversation. However the condition of this house combined with your inexperience will more than likely result in you overpaying and in all likely-hood you'll lose money. This is probably a left over that's been passed up by experienced people so it hit MLS.

And it's probably pretty bad inside if they won't show a picture...

Edith TenBroek · Answer

But isn't that what investors LOVE to see?  A hoarder house or a house no one else will want, because it's awful.  Get the price lower, and hire a dumpster?

Matt K. · Answer

This should be your warning sign right here...

INVESTOR SPECIAL ! - Not for the faint of heart. This home will require a massive clean-out before any rehab can be commenced.

That's likely code for: Not a good deal.

Andrew Syrios · Answer

Without a rehab estimate, or at least interior pictures, it's hard to tell.

Edith TenBroek · Answer

Besides trees please explain why or why not on this one?  I got comps from Jake and it's looking like 90,000 or so ARV.  Just trying to learn here folks.

Would you jump on this deal?

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