San Jose, CA · Member since 2017 · 69 posts · 25 votes
I know this is one of those questions that is difficult to answer with out the specifics so I’ll narrow slightly down to the markets of Pittsburgh and Atlanta since those are my areas of interest.
Through my research and driving around these cities I see a lot of abandoned homes many which are well below market (some 10x) in areas that otherwise look like great areas to invest in. Are these houses just too expensive to tear down and rebuild and too expensive to rehab?
Not afraid of full gut rehabs but want to make sure I don’t blindly enter new markets and get my self in over my head.
Any advice and things to look out for are appreciated.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
Ken Domond Full-gut, across the country, boarded up, dilapidated, low(er) value area...as Clubber Lang would predict: PAIN. I think people sometimes try to juxtapose full-gut vs. new construction to rationalize doing it. The reality is that mid-level housing products probably still exist that are better values. Another group of fun realities are:
1.) Good contractors typically are able to start tomorrow. The last time I looked at a rehab I got 3 contractor names, called them all, and the soonest one of them would be able to start was 9 months. Too many other projects were lined up.
2.) You’ll want to check in and those flights across the country won’t be convenient or cheap. It’s an added cost that local flippers won’t have when/if you’re making an offer.
3.) A good first step is figuring out what a licensed GC would charge per sq ft for the basics of flooring, trim, paint, sheetrock, etc. I’ll guess that even if there isn’t water damaged this stuff is in pretty rough shape. Is that (completely rough) estimate $20/sq ft or $50/sq ft.
4.) 99% of the time pictures are better than it will look in person, after you’ve bought a plane ticket.
So I’d start with figure out what a ballpark cosmetic rehab $/sq ft costs for you in Pittsburgh and ATL. Then you can throw in HVAC, foundation allowances, roof issues, etc. on a property by property basis.