Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y
Are you looking to flip it? Depending on your market a flip at that price point may not sell unless it is completely decked out and modernized. In my market buyers are PICKY with higher priced homes and they want perfection if it's been remodeled at all.
You definitely need to know your comps. If you are doing a flip, make sure your profit margin is high enough to do it right. Don't skimp out on your current market demands or you may be stuck holding it for a while.
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
7y
Are you looking to flip it? Depending on your market a flip at that price point may not sell unless it is completely decked out and modernized. In my market buyers are PICKY with higher priced homes and they want perfection if it's been remodeled at all.
You definitely need to know your comps. If you are doing a flip, make sure your profit margin is high enough to do it right. Don't skimp out on your current market demands or you may be stuck holding it for a while.
Question on a property that I am considering in the Avondale area .
The cost to gut rehab is around 125 - 150k. With the holding costs and risk involved the return is not that great.
Asking : 250k
ARV Gut rehab , A plus rehab : 475 K
ARV cosmetic rehab : Not sure
1.5 story , unfinished basement
4 bed , 2 bath - 1700 Sq ft
My question is : When should we consider a gut vs cosmetic rehab
Few things I thought about :
1. Check the comps - Are most of them gutted and opened up ? Do we have comps suggesting that cosmetic rehab is an option
2. Current condition - Badly damaged and very boxy layout
Thanks Much
Does that include finishing the basement? Sometimes the little extras can save you on the carrying costs. What would be the cost/savings of having a property on the market for 4 months vs 2 weeks.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
7y
@Kumar Tummalapalli I think the decision on whether to gut or not is made more by the condition of the property than by the "ARV". You start with the end in mind (flip? hold?), and then decide whether or not the deferred maintenance can be addressed appropriately to compensate for the risk.
In my experience, most stuff on the market right now that looks really good from a numbers perspective will have a significant construction component. If you plan to hold, having new plumbing, electrical, tile, cabinets, etc will be nice as well.
Real Estate Broker · 1732 W Hubbard St #2C Chicago, IL 60622 · Member since 2018 · 34 posts · 13 votes
7y
Hello David!
"My question is : When should we consider a gut vs cosmetic rehab"
This is something I wonder about often as well and it seems like many times when I say, "this is a gut" the investor comes back saying "we're just going to paint" and when I say "it just needs some updating" the investor declares "to the studs!"
I'm trying to learn what drives the design decisions investors/flippers make and how to work with and for those clients.
Is there a need to gut, as in there are plumbing or electrical issues driving that decision? Or do you want to gut because __(reasons)___? Are you able to share photos or a floor plan?