Wholesale OR 1st Rehab?

7 Replies

Wanting to make an offer on a property but not certain what to offer.

Preference is to wholesale.  If so, what should I place the property under contract for?

I am open to a rehab (although it will be my first).  Financing on a rehab would most likely be hard money.

The biggest issue is that I need to move quickly to get the home under contract, but am not certain what the cosmetic repairs would cost.  I have attached photos for reference.  The foundation repair estimate has already been done and is in the details below.

Property Type:  Single Family Residence

Beds/Baths/Living area: 3/3/3

Sq. Ft.:  2,417

Asking Price:  $160,000 ($66.20/sq. ft. approximately)

Foundation Repair Estimate: $15,000

Other Repairs/Upgrades:  ??? this is where I get fuzzy (it's mostly cosmetic)(see photos)

After Repair Value:  $240,000 ($100 sq. ft. approximately)

This home is located in a nice neighborhood in Dallas, TX.  Homes on the street are selling  between $220K and $270K.

Please see photos below.

Thanks in advance for your responses.

@Tiffany Reese

There are alot of resource on BP for how to estimate rehab costs, you should do a search on the forums, or check out  @J Scott 's book. 

2400sqft is a reasonably large house so that even a cosmetic rehab can add up quickly. Since it looks like a slightly older property, I'd include a contingency factor for any hidden issues that you can't see until the rehab starts.

Don't forget to include your holding and other soft costs - HML payment on this project would probably be over $2k/mo for example - how long would the rehab take?

My best advice would probably be to walk through the house with a contractor that you trust, and get an accurate quote, then go from there.

I know that house. There are already offers submitted. 

what dose your gut tell you stick with what you know or take a chance, if you take the price of 240 after the repairs then you have a $80,000.00 window to break even the question is how much for repairs VS put under contract and monies you would make for that

Hi Tiffany, Looks like you need new flooring throughout the house. Shouldn't cost more than $3k, some cabinets and countertops in bathrooms could be upgraded for another $3k-5k depending on cabinets and countertop, paint throughout (you can save money if you do yourself) or pay someone to get done quick. Based on just the pictures out here with my contractor I would estimate $15k in repairs. If you need new roof or A/C I would add $12k-16k for both. The kitchen cabinets look really nice, I would keep. Not sure about foundation, my contractor has found simple solutions in the past and have never paid remotely close to $15k. That being said having foundation problems on a first flip may be advised against. You could wholesale it quickly and easily make 10k of the numbers are correct. If you like risk and have a good contractor lined up I say go for it! You have a huge upside! -John

@Dmitri L.  Thank you for the advice. I'll check out the references you've suggested.

@Hattie Dizmond  Thank you for your response.  I'll verify with the realtor.

@Mark Curry  I like the fact that you are asking what my gut tells me to do.  I think I know which way to go on this one. Thanks!

@John Hyatt  Thank you for responding with numbers.  You have helped me with some calculations that will at least get me in the ballpark of what I need to offer.  I'll view the property today and make a final decision.  Really appreciate it!

Thank you all so much for your time!

If you decide to wholesale this house please reach out. I would be interested in taking a look.

Thank you for your interest, Lucas.  I sure will let you know.  Thanks!!

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