Your thoughts on an Investment Opportunity

1 Reply

I’d like to hear some thought on the following potential real estate investment purchase.

1550 sq ft home

The inside of the home is a disaster as there have been 12 dogs running loose for years. It appears all the floors, most of the doors and some of drywall has major issues. To the point the listing agent believes a biohazard company will have to do a cleanup. Similar houses in the area list for $100 - $110 per sq ft if rehabbed. It’s going to have to be fully updated inside, including both baths and the kitchen. However the roof is 7 years old and the hvac is less than 8 years old.

This would be my first REI purchase. I appreciate any thoughts. Thank you.

Not enough information. How much will it cost to renovate the house? The 70% rule is that you would never offer more than 70% of the after repair value minus the repair costs. This would be used if you plan to fix it and resell. 

If you plan to hold it as a rental, how much would it rent for once renovated? The value of the house, as a rental, is based on the income it produces, not price per sq. ft. 

Based on the condition, it may not qualify for a bank loan. This means the only buyers competing for this have private funds, lines of credit, or hard money lined up. You can decide who will clean it up if you buy it. 

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