Made my first offer!

7 Replies

Hey BP nation!

I just made an offer on my first investment property! It is an 846 sq ft 2/1,could be 3/1 (has an added on room in the back) in an older mill village. The list price is $25K and comparable properties in this neighborhood usually sell for 50-80K. It needs a total rehab, which I will do mostly myself (I have a construction background with plenty of connections) and I estimate that it will be worth 55-65K once fully renovated. Rents in this neighborhood go from $500mo- $750mo if I choose to hold and lease. What do you think? Feedback Greatly appreciated!

How much do you think it will cost you, materials and time, to totally rehab it? If you can do a total rehab for 10K in a week, it might be a good deal. If it costs you $50k and takes 6 months, it isn't such a good deal.

But isn't it exciting to make that first offer? Congratulations!

I estimate around $20k and around two months. It will go a little slow since I'm doing the bulk of the work myself.

Originally posted by @Mindy Jensen :

But isn't it exciting to make that first offer? Congratulations!

Oh yes it is! I've been on the sidelines for over a year and I am ready to get started! Thanks!

Congratulations @Josh Johnson , that is awsome that you got your first property. You sound very excited about it! I hope it all goes well for you

Quick math using the 70% rule shows.

$55k(ARV)*70%=38.5

38.5-20(rehab)=$18.5 offer price

I believe purchasing at $18.8k would show you a profit of approx 15% or 8.5-10K depending on financing costs, closing fees, seller concessions, etc.  

The numbers are more in line with a $65k sales price so definitely shoot for that!  Congrats on making the offer. 

Thanks for the feedback everyone! UPDATE: the bank's lowest price is $18,500 so I'm contemplating on what to do. The house is in a B- or C neighborhood and needs a full, I mean FULL renovation. I think that 18,500 is a little high for what the house needs but the neighborhood is somewhat better than comparable houses of this price range. I also have another deal in the works and don't want to get myself stretched too thin working on multiple projects. Any thoughts?

Thanks,

Josh