gutted house

8 Replies

So I'm looking at a house that seems to b a good deal to me could someone help analyze it with me and let me know what u think thanks

So this is the info that was given to me on it :

3BR / 1.5Ba 1246ft2 house

w/d hookups detached garage

This is an out of state project for me. I have too much going on where I live to manage this as well. We are looking to just payoff our loan and move on with other projects.

What we have done since purchase:

-painted exterior -replaced bad roof on garage and porch -gutted first floor walls and ceiling -purchased 5 replacement windows to upgrade the ones which are outdated (comes with the house) -gutted the plumbing

What needs to be done: Repair/replace some weak/rotted floor joists -Reinforce the trusses (outdated and weak) -Add some foundation support -Install the windows already purchased (come with house) -Install new electric -Install new plumbing -Install new furnace/AC and some duct work -Insulate and drywall the first floor -Paint interior walls and ceilings -Install new flooring -Install full kitchen and 1.5 bathrooms

The basement is accessible only from the exterior of the house and is a small (approx 10x10) room for furnace/water heater and the rest of it is crawl space.

Total rehab cost = $45,000

Purchase $59,900+45,000 rehab = $105,000 cost

Estimated After Repaired Value $160,000-170,000

There are two bedrooms now, but a third is framed in to be added on the first floor.

We have a short term loan which must be paid off, so we cannot do any type of owner financing.

So that is the info I got from this source I don't own this I'm looking at making a deal let me know ur input thanks

PS BP is da bomb !!!!!

Hi Cory. Are these numbers given by the seller? I would just double check them. Also, did he tell you what is left on the mortgage? Are you trying to wholesale it or finish the project to flip it? Remember to keep in mind holding cost aswell and how many days on market properties last in that area once they are in good shape.

yeah these are the sellers numbers I am new to real estate but most houses

In this area sell for this price never thought about wholesale but anything is an option for me I'm pretty open being new at this. I was originally thinking flip with my construction backround. Is this a def no when it comes to rental because the rehab costs thoughts ?? And thanks for the reply!

rehab cost have nothing to do with properties potential as a remtal. I prefer to rehab rentqls especially the major systems as it usually saves on maintenance cost down the road.

You do need long term financing in place to rent it or cash to pay off your hard money loan.

This *could* be a decent deal...here are some thoughts:

- First, why is the person selling? Sounds like they started a rehab and now are giving up. Maybe it's a personal situation or they're in over their heads, but it's also possible that they realized the numbers didn't work. And if the numbers don't work for them, they certainly won't work for you.

- Are you sure the $160-170K ARV is accurate? This would be my biggest concern given the information provided.

- The rehab costs *could* be accurate. In Atlanta, we've done a few flood houses that were similar sized to yours, down to the studs for about $45K. I'm thinking MN might be a little more expensive, so I'd add $10K to that to be safe...and that's assuming you can get good, inexpensive contractors.

- You said you don't have much experience. This is a decent sized project for someone without experience. Consider that before jumping in.

- On top of being new to real estate, you say this is a long-distance rehab.. I've written about this before, and trust me, it's not easy. I recommend most people stay away from long-distance flipping even if they have a lot of experience; if you have no experience, I'd run away very quickly. If you move forward, you will want a local agent, you'll need reliable contractors, and you'll likely want someone who can manage the project on a day-to-day basis. Even then, for something of this scope, you'll likely want to spend a decent amount of time on-site.

If I were your mentor (or even just your friend), I'd highly recommend you not consider this deal...

J

Thanks a lot for all the info I actually live close to the project and have alot of experience in construction so I may be able to do some work myself depending on how expensive it would be for the contractors which I know quite a few that would do the work and I trust them. So with that being said do u still recommend not doing this deal. Thanks again

Originally posted by @Cory Schmidt :

Thanks a lot for all the info I actually live close to the project and have alot of experience in construction...

Sorry about that...thought you said it was out of state and you were new at this...

If it's local and if you have the experience for this level of rehab, here are my recommendations:

- First, verify the ARV. Talk to a local agent or appraiser who can provide a CMA or some other basic value analysis.

- Next, verify the rehab costs. Get a GC to walk the property with you if you can't do it yourself, or find another investor to give you their input.

- Once you have the ARV and the Rehab Estimate, it should be pretty easy to determine if the deal is a good one. If you provide those numbers here, we can probably give better feedback.

Ill be setting up appointments tonight and posting more info as it comes thanks all

P.S. BP is phenomenal!!

so I walked through the house and it was a heep it had a shell built around the original house for what I do not know to hide flaws maybe it was not level anywhere and the walls were not plumb and the foundation was pretty bad it looked as though the foundation shifted the whole house out of wack and on top of it all they painted over old cracked vinyl siding on the garage and the house itself lol o well onto the next I guess...I was excited to start my first deal but a bad deal is a bad deal and I'll continue to look ...any suggestions on places to look besides the mls, trulia, zillow ...?

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