BRRRR When the Rehab Cost is more than Purchase of Property

[Rachel Trimble]

Hi all,

I'm evaluating a property in San Antonio right now and am hoping someone has some advice for me. The asking price is $50k, but based on calculation, I could only pay up to $40k.  The repair estimation is $65k. Does anyone worry when the repair cost is more than the property acquisition? Does it matter? It would still be more cost effective to rehab this property, rather than buy an empty lot and build from scratch.  Any advice is greatly appreciated!!

[Hattie Dizmond]

You aren't giving us 2 very important pieces of information...ARV & what your exit strategy is.

Without that information it's tough to give you an objective opinion on the deal.  However, I would note, you mention you feel this deal is more cost effective than buying a vacant lot and building.  However, have you considered a scrape-off and rebuild on this lot?