How much should I expect to pay for a SFH that has been fully gutted??

Question

I am a newbie to all of this so I am asking for some advice. I sent a yellow letter to a home that looked like demolition was in progress but was stopped for some reason. Yesterday, I actually got a call saying that they would love to sell the house. They are motivated to sell because the demo just became too time consuming with young children and they could use the money. (they own it free and clear) They have completely gutted the home. They put a new roof on the home and they have installed a sump pump in the basement. The house need everything else: Electrical needs updating, HVAC, new windows, fixtures, appliances. They are asking $25,000. It is a smaller 2 bedroom, 1 bath home where the previous owner had apparently converted the only garage into a third bedroom. Other houses in the area are selling for mid 60's to low 80's. I estimate the home to be a little over 1000 square feet above ground plus a full basement. Before I look at the home, I just wanted to get some clue as to what a typical home of similar size that has been gutted should sell for. Any advice would be appreciated.

Dawn Anastasi · Answer

One option for you is to do what Pat suggested and simply put up walls, ceilings, and floor and mark it up to sell it for another investor or owner buyer to finish the way they want. If the seller is asking for $25,000, you can always try offering them $15,000. If they get offended, then you've got a good starting point. If they accept right away, then you offered too much.

Engelo Rumora · Answer

@Sandy Uhlmann

I am based in Kansas City Missouri. I always calculate minimum sale price with max rehab costs. If your paying $25,000 for the house I don't think the margin will be good enough if you sell for around lets say $60,000. The positive is the "new roof" so thats a big expense you wont have.

Feel free to ask any questions. I am happy to assist.

Thanks.

Aaron Yates · Answer

@Sandy Uhlmann , unfortunately to get you a better response you need someone local to your area to help you with these numbers.

Here is a link to one of my blogs. It lists various sites I have used for years doing my comps. It will take you some time to learn what is garbage and what is real but generally the lower numbers are distressed sales. The really high numbers are most likely the sheriff auctions which is basically the amount owed to the bank. the numbers in the middle somewhere is where you can refer to a property most likely in the move-in-ready condition.

Of course always check with your agent and he can confirm the comps for you. After years of researching, the links I use have helped me the most with the least amount of BS.

http://www.biggerpockets.com/blogs/4178/blog_posts/29349-arv-calculating

Pat L. · Answer

Up here we would jump @ $25,000 esp given the comps you quoted.

BUT we do all our own rehab work.

We did get one (several tears ago) stripped to the studs @ a tax lien auction for $12,500. We put $7,500 into it & sold it for $48,000 unfinished to a good friends 20yr old daughter. She finished the bathrooms & kitchen HER way.

Being young & single she converted it to a 2 (large) bedroom 1.5 baths & her refi appraisal came in @ $68,000.

James Wise · Answer

you have to look at the comps. What are complete homes of similar traits selling for? Then get an est of your costs to get this complete. If rehab + purchase price is under comps = good deal. If over = bad deal.

How much should I expect to pay for a SFH that has been fully gutted??

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