Analyzing if a rough rehab will cash flow

[Holly Harvey]

Hey everyone,

I'm new here, but I think I may have stumbled upon a potentially interesting deal. I found a VA foreclosure property that is listed about 35% below the houses surrounding it. It's listed at $157K and the houses of similar size around are valued (according to zillow) around $240K. Per the photos, it needs a decent amount of work (new carpet, kitchen appliances, new paint, looks like one of the bathrooms needs a vanity and toilet, etc). I don't yet have the skills to analyze rehab costs accurately. I don't want to use that as an excuse to not look into it, but I also don't want to get myself into a money pit for a first deal. Does anyone have advice on how to gather and analyze additional information, what questions to ask, and what next steps to take from here? Thanks so much!

[Allan Smith]

There's a process for buying real estate and this ain't it. 35% is nothing (will be absorbed by repairs), and using zillow valuations is terrifying.

1. Calculate arv by looking at comparable sold houses

2. Calculate repairs by looking at photos or paying a contractor for a bid.

3. Use profit formula that meets your goals. Standard is 75% of arv, then subtract repairs. That's your offer price.