I have found a property that I believe would be an amazing flip, but the seller is unrealistic on what he could get for house in its current condition.
Here is a little background:
1) Seller asking price: $375,000
2) 6 bed/2.5 bath on a historic street, neighborhood is great, schools are marginal. Lot size 1.26 acres with mature trees. Condition: awful, built in 1926. The house would essentially need to be gutted.
3) The owner passed away and her 3 children are wanting to get rid of the house. 2 of the children want it gone, but the third is holding out on his unrealistic assumptions.
4) House (built in 1917) nearby is listed at $525,000 with 7Bed/5bath on 1.4 acres in "move-in ready" condition with a pool in the backyard. This house has been listed for just over a year and was originally listed for $565,000.
5) House directly across the street just put on a $300k addition.
I have not hired an inspector or a project manager to help me estimate the cost of repair as I am just identifying the potential of the project. Let's call it $150,000 for this exercise. This is assuming asbestos and lead based paint remediation.
I think the house would easily sell for $450K-$475K once repaired based on the location and the comps mentioned above in 4 & 5, but am not sure how to approach the seller with an offer of no more than $165,000 (based on the 70% rule arv:$450K).
I would like to lock up this house and then get a contractor in to really understand what needs to be repaired, but can't imagine the seller allowing for such a price cut.
Any insight or strategy would be greatly appreciated.
Here is a picture!
Based on your information, I am curious as to why you think it would be a great opportunity ? Here are my red flags :
- A renovated property has been on the market for over a year would be a huge red flag for me
-Looking to get a seller down more than 50% of their asking price will probably be a lot of time wasted
-I have seen the "romantic" notion of restoring large old homes take down many a house flipper. I have done this a long time and still would be very hesitant to take on a large project like this. Gutting an older house often reveals many many more issues and costs
Good luck and it does look like a very cool house !
Thanks Greg H.
I agree with everything you are saying. I wouldn't try to undertake a project like this unless I purchased the house for a very low price. I have heard rumors that the sellers might take this house to auction, which would be ideal. I'll keep tabs on the house, but it seems like the sellers are not very motivated to move the house.
I just bought a house that's 1600 sq ft and when you walk in, you think oh this isnt so bad. A little touch up here, a little tile here and this place will be mint. Let's be safe and budget $35k. The barebones construction estimate is now up to $50k and could go higher. Just saying that a big house like that with substantial repairs could become a big headache and a giant drain on cash. You could but several houses that are much more marketable for the cash going into that one.
Thanks @Bill Coleman
This is why I love BP. I can post ideas of what I think would be a cool project knowing that people I have never met can help me avoid big headaches. I'll passively monitor this house.
Have a great day!
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