OK this post is more out of frustration of our local and I guess my inexperience (only a couple flips under my belt) than anything but I would like some help with the analysis..
I got a tip from a friend that knows a couple that had a property in a nearby town that they intended to flip (but never finished). He got a big promotion and has to move the family out of state ASAP, so they need to dump the house. Its structurally sound and stripped down to the studs. I called them up and they said they would let it go for $6,500!
I'm thinking home run until I ran the comps.
First- The market is still terribly stagnant in our rural area. Comps 65K-100K (None completely remodeled)
1600 Sq/ft 3-2
At this price I would need to get at least 100K for it which is at the top of the comps. It is extremely frustrating to be able to find a deal like this and still not be able to feel confident in the flip. What do you guys think?
WOW! Ok I see I added my numbers wrong! TOTAL =76K
I have never put $60k into a rehab, even in the best areas. I would never ever consider doing a $60k rehab on a house where the comps are $65k-$100k. Not sure what "additional" includes but remember cost of holding, financing, utilities, taxes, etc. Then make sure to subtract realtor fees, closing costs for you and the buyer and any concessions from the sale price.
If you could rehab for $30k that'd be a sweet deal, otherwise I would walk.
Currently working on a 1350sf SFR, needs full perimeter excavation and foundation repair, tear down garage and rebuild (including footings), driveway remove and replace, gut kitchen and 2 bathrooms, minor wall repairs, paint, flooring and light fixtures, new electrical panel, furnace and air conditioning replacement.
Total rehab cost is $56,000.
I couldn't imagine your property needing more work than this, which leads me to believe that you're contracting your repairs out at a cost that prices you out of the property.
Everyone has strengths and weaknesses in their business. My advice is to hit your sweet spot, and avoid pounding a square peg into a round hole. Just because it could be a good deal doesn't mean it's a good deal for you.
Great house...in the wrong market. You can rehab a house, but not the market. Since the house and market come as a package deal, maybe this isn't as good a deal as you think it is.
@Robert Shadley the mere fact that your asking the question means you should walk.
Yeah the house is gutted on the inside and needs a new roof.. I could do the work myself but I am trying to figure it as to hire it all out. 60K is kind of conservative.
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