Investor · Careywood, ID · Member since 2015 · 53 posts · 8 votes
Hi, looking at an article I saw on BP, if a house was built in 1902 I would est $1 per sf for every year old for rehab. That would make this estimate, for a house just under 900 sf, about $90,000 to rehab? Is this right? The house is a little one bedroom, has water damage on the walls, lath and plaster construction. It does need a lot of work but is a solid little house, from the walk through. I realize an inspection would be done but should I even bother putting in an offer? The asking price is $48000.00 and wouldn't be worth anywhere near $140,000 (purchase price plus rehab) when done. Even if I got it for free I doubt it would be worth the rehab costs if I go with this formula.
Is this something a 1st timer shouldn't risk? I would keep it as a rental at $500-600 per mo.
@Katy Fry Couldn't say without seeing it, but 90K is way high unless you are also adding square footage. These broad rules of thumb make for fun blog posts, but are too general to apply in practice, and every deal is unique. At that age there is certainly plenty to go wrong however, depending on how well maintained it has been up to this point. Does plumbing and electric need to be brought up to code? Do you need to dig up the sewer line? How's the roof? HVAC? Etc etc. For a first timer I would recommend you learn the ropes by sticking to a light rehab say under 30K, or however much money you are able to lose, whichever is less. Also at that rental, you're also likely to lose money.
Thank you @Kuba F. It does probably need plumbing repair and electrical upgrades. It's also got about a foot of snow on the roof so not able to really see that except you can tell it's metal put over shake. And not a real professional looking job at that on the edges.
I am thinking this is more than I'm willing to take on, unless they want to sell just for the land price.
@Justin Fox I was considering the easiest way to get it rentable but it all depends on the price they will take. I'm waiting for my realtor to get back to me on an ARV for that area and will see what I think. Around here, finding a place this cheap is not easy and I do work 6 days a week at a day job so I have to consider my time as well. I'm also hearing "mold, asbestos issues". May be more than I could do cheaply even to get it to rental standards.
Yeah well, using $1/SF/years of age is about the wackiest way I've heard of for estimating rehab.....you could have the same rehab costs on a 5 year old house. The rehab is what the rehab costs is.....but that would take some actual analyzing of what needs to be done, and the cost to do it. Over $100k for $500-600/mo does make no sense though.