I'm looking at a deal that is in Buda, TX 3/2/2 1200 ft sq. Tenants in there until Oct @$1250/month. Cosmetic repairs. Comps range from $116K-179K. Looks like the ARV is around $145K. Tax record value is $129K. The seller is asking for $155K. Good deal or not?
I think it is...for the seller!
I live a few miles from Buda - can't say for sure without knowing the address but you can definitely do better than that in the area. Sounds like this is pretty much full retail. Austin of course is still hot but Buda is not Austin even though it's relatively close.
I've looked at buying a new-construction duplex in Buda a year or so ago. The price was $280k for the two units that could rent for about $1,300 each, so even that pretty fully-priced deal was better, and for new, move-in ready units.
it seems like you have answered your own question. If the ARV is $145,000, and the sales price is $155,000.... It is a good deal if your business model is based on buying properties at 107% of retail value.
Thanks everyone! I think I need to negotiate down or turn away!
On top of the already thin numbers there's what you call "Cosmetic repairs". A term bandied about that's seriously lacking in usefulness. So, cosmetic repairs, does that mean paint just the inside, $2-3 sq ft. Outside, another $2-3 sq ft. Ceiling fans $150-250 ea. Recessed can lights $60 ea. New outlet & switchS w/cover plates $4-6 ea. It goes on. Before you know it your cosmetic rehab costs you $6000 & up. And you haven't even started on the floors.
The 2 biggest mistake in RE investing. Over estimating ARV, which your seller has done. And under estimating rehab costs, which you seem close to doing. This deal may be a no go. But keep a realistic eye on the rehab cost.
Austin area tax appraisal values are nowhere near accurate, so you will need comps from a realtor to find the values nearby rather than the public information. But for that size home I can tell you you're buying market price.
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