florence, MS · Member since 2024 · 11 posts · 11 votes
Hello everyone,
I'm currently in a situation i was hoping to get some helpful insight on. There is a house (2b x 1b) in the family I was interested in becoming the owner of. Zillow is saying the house is worth $90k but recently a tree went through the back end of it and I was hoping to get some information on possible ideas or suggestions on what I should do about the situation. Should I go through with taking ownership of the property and try to salvage it for profit or do I refrain from even involving myself in the situation as it may cost more than it's worth to save it? I believe the ARV could possibly be $150k but i would need to put $80k+ into the property. Any suggestion, advice or insight would be greatly appreciated.
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
1y
At $800/month, that would barely pay for the rehab costs (using BP's 1% rule). If I were you, I'd pass on this property and look for something else (and I suggest a 3 BR) under $80 that you can put a little rehab into, unless insurance pays your family member a bunch of money and they accept a much lower price.
Financially, I'd only do it if you could convert to a 3x1 AND get at least 50% higher rent.
I dont see getting 50% more. I see what you're saying about the 2% rule. I think the most I could possibly get monthly out of the property is 1000 based off of rentometer, zillow, and BP. I was looking to put 80k cash into then refi afterwards and possibly getting 130k. 130k on mortgage would be close to $800 only leaving $200 in cash flow each month.
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
1y
Right, but to get an ARV close to $130k, you'll probably need rent to be close to $1,300 unless you can sell it to a retail buyer, which could be a big risk on its own.