Hi there BP members,
I'm currently working on a deal analysis on my first fix and flip property. it's an REO with 3bd 1 bth 2,392 sq ft with a finished basement which was built to be a tornado shelter. (A Realtor said that the basement is not included into the 2392 sq ft) . It was built in 1947 and has a lot of 0.82 acres. it's located in a small town in Oklahoma. On this lot also also has a house that to me they might have used it as an office back then and a barn. My contract and I went to see the properties and he gave me a rough repair estimate of making this properties in a great shape again around 30K and the listing price is 49K (Last sold in 2002 was 80K). My concern is I really don't know how much this house will worth after it fixed up as it's actually not located in the neighborhood (it's right off the highway, and across and on the back of this house are commercial buildings.) Next door house was just recently sold for 138K but it's a little bit newer and has ~2100 sq ft 4bd 3bth and has been updated. Other houses in this town are vary in the range of $35-45/ sq ft.
What do you guys recommend on finding comps in this situation?
Another questions is about the condition of this house.
This house will be sold as as-is and the bank won't turn on an electric, water or gas for an inspection. It was vacant for 8 months since the previous owner got foreclosed on. However, my contractor said that the foundation and structure of this house is still solid. it's looks like that the electrical boxes got replaced. The roof might have to be replaced but we're not sure as my contractor doesn't have expertise in the roofing and he said that they were made of composite material that he never seen in residential houses.. usually seen in commercial building. we actually went to see this house on the rainy day and looks like there no water leaks into the house. The basement is actually goes around the whole house and has 3 small rooms with 1 bath. We see some small moles issue and water damage on walls and windows.
Do you think a basement is a positive thing to have? or will it take a lot to fix and clean up?
How much should I offer the bank in this situation?
Please jump in and share any thoughts, concerns, comments how do you want to approach this deal?
Thank you so much!
before you make an offer you have to know what the ARV is. Can the real estate agent do a market evaluation for you?
Agreed with Mark. You have to know how much it will resell for (and what it will need to look like to sell for that amount) before you can analyze the deal.
A good agent can help you...otherwise, find an appraiser to give you an idea of the ARV.
It would definitely be a good idea to have the roof checked by an expert. The cost of replacing the roof should be worked into the deal. I'd also try to see how long it took to sell the home next door as that needs to be worked in with your holding costs. Knowing the after market value and estimated time it takes to sell will help you to see the big picture.
Hope that helps!
Hey @Ari Yenjai - as the other folks have said, getting the ARV is gonna be key, and since this is a flip, talk to the agent who will be selling it. Then subtract a little, cause agents are always a little too optimistic :)
Also - a warning - I would be cautious about starting your first flip with something that's not-normal. If you have trouble finding comps- you probably shouldn't do it. I've learned that lesson the hard way.
Hope that helps some! Also - since you are PRO member, I'd run the numbers through the BiggerPockets House Flipping Calculator and see how it pans out (after figuring out a good ARV, of course.) I'd be curious to see your results!
My agent doesn't know the ARV for this property as he said it is such a special home so it might be hard to sale. He said that it really depends on what degree I am going to bring the property. However, I found out that from the listing agent that it went under a contract this afternoon.
Thank you so much guys for the advice @Mark Ferguson @Rachel H. @J Scott @Brandon Turner
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