Investor · Los Angeles, CA · Member since 2011 · 305 posts · 56 votes
Hey guys, based on these pics of the 1300 sq ft home built in 1940, what would you guess the repairs would be? Keep in mind I will have to add a bathroom.
It has a new roof and new electrical. That's it. Furnace heater with floor vents, galvanized plumbing. Old kitchen. All things I can live with while slowly fixing up the place.
Great size lot, great neighborhood. Homes fixed up to the max similar sizes are selling for anywhere from $550K in June, to $615K recently, but those homes were a little bigger by about 300 sq ft. He thinks its worth $500K as it sits, and I still think that's a little high for the work needed, but I could be wrong.
At $500K it's still about $60K out of my price range to be honest, but I could get it under contract for say $480K and flip it to a rehabber for say $500K. Even with $65K in rehab costs, if they sell for $615K that's a nice spread. Thoughts?
My answer to all three questions would be, "There's not enough information..."
Nobody can tell you how much a rehab will cost by just looking at pictures. To know how much a rehab would cost, you need to consider the scope of work, the finish level, the specific contractors, the location, the time of year, your negotiation skills, etc. You at least need that first piece (scope of work) to even ballpark the cost. If you can provide a detailed scope of work for the project, we may be able to help you get a rough estimate, but a few pictures can't tell us what's in the walls, how the foundation looks, what the level of finish needs to be to compete with other local properties, etc.
@J Scott Got it! Forgot to mention that my wife is also my agent. Will be saving a bit on fixed cost. However I still like to estimate on the high side so I will stick to the 50K for fixed costs.
I am looking at a particular property in my area. It is a 3 bed 1 bath 1200 sf w/ pool. asking price $520K
two comps in the area 1. 2 bed 2 bath 1000 sf renovated sold in nov $600k, 2. 3 bed 1 bath 1250 sqf renovated no pool. listed at 630K sold for 610K in july.
Here is my calculation: Sell price $625K - 30K (rehab) - 35K (profit) - 50K (fixed cost)
MPP = 510K or less?
@Curtis H. sorry i dont mean to high jack your post. the property you mentioned is similar to the one i am looking at.
Steve, how are you with estimating rehab costs? Rehabs can easily blow out to double your original estimate, especially if you are looking with a somewhat un trained eye.
On top of that your $35k profit for having $500k tied up for potentially 4 + months is kind of anemic, if the above happens (rehab estimate doubles) there goes all your profit. We would generally aim for $80k+ on this purchase price, and have a solid rehab estimate.
Be liberal with cost estimates, and conservative with comps and profit expectations.
One thing that nobody has mention yet that might work for you is a lease option. It would allow you to lock in a price now and save a portion of your rent as a down payment. This could help with the financing later on. Good luck.
without wanting to continue hijacking this thread, how rehab costs run over initial estimates? Generally that starts with the rehabber not having a proper idea of the cost of labor and materials, it then moves on to old construction throwing up surprises you weren't prepared for (plumbing, electrical, structural problems not seen until things are opened up). Now on top of that you want to play with a pool, I hope you have good access just in case machinery is needed for any potential repairs.
Not saying any of these will happen to you, that's why I asked about your estimating/construction ability and experience. One thing I will say is value your time and money higher, you need to squeeze more than potentially $35k from this deal.
Here's the thing with rehabs in socal that we flippers have an advantage then most states. Our median home prices are well over $400K - that gives us a competitive advantage that most flippers can't do...
What do I mean? It's called the addition play...
You said this "home" is 1,300 sq/ft that's $384 per sq/ft. If consturction to "add" an additon cost from $100 to 120 per sq/ft... you'll be getting over 3:1 on your money. This addition play are where you make killer spreads.
So let's say the comps are actually well over $600K+ if you build a 2K+ sq/ft home. I'm doing 3 projects where I bought the homes between $500K to $900K and flipping them over $1.5MM. ALL of these home we bought slightly under fair market (with an exception of 1). This could turn into a monster flip but... without the whole information is tough.
Final thought... become a master to evaluate deals. I tell people to just tie it up if you don't know and start from there. The reason is, you may have already lost this deal.
- Jeff
P.S. Oh Btw... The idiot on here who said this question screams newbie should be ashamed of themselves. You got a man who paid good money for leads begging for help and you say it screams newbie. Thank you Mr. Obvious LOL I'm sure you were a newbie at one point. Spread the good karma.