Good Morning BP Community,
I'm looking at a owner-occupant(it probably would be sold by now otherwise) foreclosed property in Huntsville, AL and wanted peoples quick opinion on if this is even worth pursuing. Would be a buy-and-hold/BRRR.
Walk-through Video: https://www.youtube.com/watch?v=QeiuirTqxcg&feature=youtu.be
Here are the details:
- List Price: $13,900
- 1600 sq. ft. 4 bed/2 bath
- (C-) area, but gentrifying
- Comps with med. builder grade finishes ~ $70K-$100K
- Rent Comps ~ $900/mo
- The house has multiple code violations (see picture below):
- At the very least needs(new): roof, electrical box, water heater, a/c unit, flooring, windows, doors, kitchen gut, bathroom gut, couple walls removed.
- As far as I can tell the structure itself is o.k.
This would almost be a gut rehab in my eyes. The bedroom/bathroom walls all seem fine, but the "living area" is separated by an awkward couple walls(see video) that I would want to remove and if it make sense add a support beam and open up the kitchen and living area completely. I know it's hard to estimate gut jobs like this but I was hoping some professionals might give me a ballpark idea. Currently I am estimating $40/sq.ft, so all in at ~$78k which means I'd almost be breaking even.
Huntsville, AL is a hot market. Another option would be to buy the property, demolish the house and hold the land until a new build makes sense.
Everyone's input is greatly appreciated! Thanks so much!
in those areas there are no new builds or very rare you can still buy for less than replacement cost of about 80 to 100 dollar a foot for new builds.. until that swings big time no way that works lots are worthless.
rehab costs are regional.. like in San Jose my niece just got a quote for a 500 ft master bed addition at 250k..
500.00 a foot.. lumber cost the same as Huntsville ??? all the materials cost the same ..
I suspect in those areas C - meaning its really D you just find existing homes and buy those why go through all the brain drain and the risk of rehab.. your not going to save that much.. and if you leverage the savings might amount to 25 to 50 bucks a month in a mortgage payment your tenant is paying anyway.. you want to risk all that to do major rehab ?
if your going to flip it I would get that .. flip it make 20k pay your tax and move on.. take you 5 year to make drip income in what you could make in one closing and you don't have to deal with tenants for 5 years which U already now in that neighborhood are going to be a challenge
Thanks for the reply Jay, I should of mentioned my intention was to live in it for at least a couple years and have the option to rent it out if/when I move. Either way I'd refinance it after the rehab.
I saw that property on the MLS. At that price point that property is sure to move fast. I definitely don't think that it would be worth tearing down to rebuild in that subdivision. There are no other new builds in the area. If that was a little further norther or East that may be a viable option.
As far as rehab that would not be an easy project if it were your first time to at the rodeo. Nevertheless that is a great rental neighborhood. Also, there are really no D class communities in Huntsville and it hasn't been a property on the MLS that low in a longggg time.
I decided to pass on this property. After walking through with my agent and getting some of his feedback/estimates, I just was not comfortable with the amount of work and unknowns involved with this project. If I had a larger cash cushion it might of been a different story. Nevertheless, I think it is a good deal for a worthy investor(would of been my first deal).