This is a part of another post I have which can be followed at: http://www.biggerpockets.com/forums/41/topics/1635...
I have started a new post as I have a more specific question in regards to the property (3/2.5; 1650ish sq.ft.) that I am interested in. In posting here, I am hoping to get a response from more seasoned rehabbers.
I have spoken to the owner of the home and the following is what he is aware of that will require attention. Please take note, that I will be getting a full inspection and will also have a GC in there for the sake of having two different sets of eyes looking at it.
The items that were disclosed are:
i) All carpets will need replacement (either with new carpet or wood flooring).
ii) The was a failed valve in the master bathroom which has soaked the drywall and damaged other areas. In short, the whole bathroom will have to be redone.
iii) The common bathroom has slight water damage from leaking end caps, but is not extensive and only the dry wall will have to be replaced. Besides that, the whole bathroom has been updated recently.
iv) Some of the baseboard will require changing. Since this is an 18 year old home, I would prefer to get all the baseboards done.
v) Laminate from the kitchen counter tops is peeling and can either be changed for new laminate or completely replaced with granite, tile or other material.
vi) The home has not been updated (besides the common bathroom) and I can update it to the extent that my budget allows or to my liking.
Also note, the A/C unit and the roofing (not only shingles, but the whole roof) was installed new in 2004.
The owner thinks that I can get this completed within a budget of $30k. What are your thoughts.
I also have a concern with the water damage and am wondering if I should be taking on such a project as my first one. If all works out well, the deal would be a very nice one and I am struggling to make a decision of whether to let this go or embarrass it and move forward with a lot of due diligence and inspections.
Thank you in advance for all the input.
Wishing you all a very Happy Holidays!!!
I didn't read the link to the other post. Based in the information in this post, I would put it under contract get a 10 day option period do the due diligence and let the numbers decide if it works or not. Until it is under contract there is no deal. Once it is under contract you can decide if the numbers work for you or if you can wholesale the deal to a seasoned investor. They will let you really quick if it is a good deal.
Why does the owner think you can get it done for $30K or less. Does he know what you plan to do (your Scope of Work)? Does he know what finishes you'll use? Does he know what contractors you'll use? Does he know whether you'll use a GC or manage the process yourself?
More importantly, do YOU know the answers to these questions?
Until you know the answers to these questions, you won't know how much it will cost. And he certainly can't answer that question for you.
- Put together a Scope of Work
- Get bids
- Generate a rehab estimate for the entire project
- Determine ARV
- Use the ARV and rehab estimate to determine how much you can pay for the property
There's really no shortcut to the process, unfortunately...
@Katie Neason Thanks for your response. Unfortunately, I can not put this under contract as it is a foreclosed property heading to auction. The link included explains the details.
@J Scott some very valid questions there. The owner quoted this figure as he was going to get the work done at some point in the past and this is what he was quoted. He said that if I had to do the work myself, I could shave $10k+ off that figure.
At my end, I am getting a full inspection done, as well having a GC from my end give me estimates. I will determine the final figure for repairs based on the evaluation of these two.
Originally posted by @Sam Alpha:
He said that if I had to do the work myself, I could shave $10k+ off that figure.
I've had sellers tell me that as well. I have to explain to them that if I did the work, it would end up costing me a whole lot more, as I'd have to bring in contractors to do everything again, PLUS fix all my mistakes... :-)
Lol. You seem a mean negotiator. I will try that line at some point. However, I know the story behind this gentleman and knowing that I'm already getting a decent deal makes me not want to be greedy.
I always looked at everything as "business" and numbers, but with gaining maturity over time, I have understood that the value of relationships and ethics is so much more. In being aligned with these principals, ironically, I have fared better.
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