Hey yall! I hope your day is going great!
I recently acquired a property under a contract under the impression that it was 1500 sq. ft. I was initially going to wholesale this because I got it at a great deal.
I did not measure it immediately. The foundation is in great shape, but everything else needs love. So I offered the price of a distressed property that I can make a profit on for 1500 sq. ft.
My problem is this:
The house actually has 3800 sq. ft.
The basement is above ground, and in the state of TN, basements are counted as livable square in addition to the upper levels. Usually, any wholesaler would be HAPPY about this, but I feel a sense of tremendous anxiety because I do NOT want to wholesale this. I want to BRRRR this.
I confirmed the square feet with the city tax assessor, and he told me that the previous owner never allowed him access to the home because he did not want to pay the city taxes for an extra 2500 sq. ft. So they only counted the top floor minus the garage.
My issue is this:
1. I cannot find a comp for my LIFE me. Some homes are similarly built, but my house faces the forest, while the other ones face the mountains. If I am going to rehab this, I want the confidence of knowing it can hit a certain ARV, but I can only comp to homes with 'as-is' renovations simply because there is not much flipping activity on this street.
2. I got this at a price that would make a quick sale for 1500 sq ft. wholesale. But I feel a tremendous sense of imposter syndrome and don't feel qualified to tackle this. My realtor friends cannot give me a good ARV because every house they show me either has +/- 1000 sq. ft. As I said, there is a lack of flips on this particular street.
3. Renovation for a 4000 sq foot home is a big challenge compared to 1500.
Honestly, I'm just scared and can use advice on how you would move forward.
How do you find accurately reliable ARV's in this situation?
My private lender is ready, but how can I have the same confidence in myself when I have never worked with contractors at this level before?
How did you do it?
Edit: not that it matters, but the basement is the best part of the whole house. It has a studio apartment/loft feel. The plumbing is ready for a full kitchen and it already has a full bath, so I was going to convert this to a duplex .
Just off the top of my head.....if you got a really great deal on this then the spread is going to be generous. If you lack the confidence for a major rehab (and believe me, conversion to a duplex will come with it's own stack of paperwork to do it legally)...if you lack the confidence then find someone to partner with.
In exchange for some of the profit, you'll get a first class education as well as getting paid. The first time I had to do something more than cosmetic, I got help. That turned into a very lucrative partnership over time as we've now done many homes together. After the first two I felt qualified to go on my own....but why?
Partnerships can be truly amazing especially if it brings more skill sets to the table.
BTW....welcome to BP!! Looks like this is your first post. Sounds like a good problem to have....
@Richardd Barran Looks like you got yourself a great deal, congrats!
With the information you provided, my advice would be to wholesale it, your end buyer will see the value of the +2300sqft and i believe you can make a nice spread, then roll up your profit in another deal with less complexity.
My advice would have been different if you already had several deals under your belt, but as a new investor, you don't want to mess with the complexity of large-scale rehab.
Take the money that's on the table now, and find a deal that only requires small cosmetic touch-up.
Enjoy the journey ;)