quick analysis for a cash deal, making offer in 1 hour

Real Estate Deal Analysis & Advice
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quick analysis for a cash deal, making offer in 1 hour

Mark UpdegraffBusiness Member
Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes

Hey you bunch of insightful RE kingpins!
Newb here again, just giving a quick run down for a thumbs up or thumbs down on a SFR I'm about to pull the trigger on:
Former Rental, on the market at 40k, current tenant caused a kitchen fire, now it is vacant and the price is 20K, got a verbal from the listing agent they will take 18K cash. No other offers on the table, but some dude was starting rehab on the house when I went to look at it... he hasn't even made an offer... weird... anyway, we kicked him out to look at it, called the listing agent and said WTF!!

OK OK I digress.
Guessing the rents on the house will be $775/mo + all utils.
Also guessing that rehab costs will be ~10k & closing costs about ~2k
so I would be in for 30K. Would plan to refi back out at 80%LTV after rehab. Guessing rehab would take 2 months. Quick close would get me student tenants, perfect timing.
Here is what it needs for my 10k estimate:
Roof repair (spot where kitchen fire was, also saw another are. Looks OK from outside, but needs some attention in spots.
Furnace needs a cleaning at minimum, power / services are off, so not sure if it is working.
Needs all new floors (carpet)
Needs Paint Sprayed EVERYWHERE
Kitchen / Bath need Gutted
Electical fixtures need replaced.
Exterior OK, maybe clean up, fix basement door, add privacy fence.
Paying out 3K in labor.

Sound Good?
Thanks!!
Mark

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Updegraff Group Realty4.745 Reviews
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Dale Osborn
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
16y

Relying on others opinions is not the best way of doing things unless you want to be able to point the finger away from yourself as to why a deal fails. The due diligence items need to all be examined by you. Hope you get things organized and get into somm great investments based on your sound evaluations and not on opinions of others!

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  • Dale Osborn
    Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
    16y

    Relying on others opinions is not the best way of doing things unless you want to be able to point the finger away from yourself as to why a deal fails. The due diligence items need to all be examined by you. Hope you get things organized and get into somm great investments based on your sound evaluations and not on opinions of others!

    1Reply
  • Mark UpdegraffBusiness Member
    OP
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
    16y

    I rely on my own abilities, but I enjoy the BP sounding board. I'm 8 deep with about 35% ROI cash on cash prior to finding this forum... so...

    Cheers,
    Mark

    Podcast Guest on Show #112
    Updegraff Group Realty4.745 Reviews
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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y

    Invest $30K to rent for $775? Works for me. Who will refi it after rehab?

    0Reply
  • Mark UpdegraffBusiness Member
    OP
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
    16y

    Not sure who I'll use yet. Own 1 property free and clear, so thinking I'll take Jon's advice on another thread and when purchasing another house, using these two to get 150% out.

    Podcast Guest on Show #112
    Updegraff Group Realty4.745 Reviews
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  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    16y
    Originally posted by Mark Claire:
    Not sure who I'll use yet. Own 1 property free and clear, so thinking I'll take Jon's advice on another thread and when purchasing another house, using these two to get 150% out.


    Do you have a link to that thread? Or name of the thread?
    0Reply
  • Mike McKinzie
    Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
    16y

    Fire situations can be tricky. What may look like 10K could end up being 20K. Smoke infiltrates everywhere, drywall, carpet, drapes, cabinets, insulation, even the wood structure. one rental I had, had a small kitchen fire and no matter what I did, I could smell smoke for 3 years.

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  • Mark UpdegraffBusiness Member
    OP
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
    16y

    Thanks Mike, this is the kind of stuff I was hoping to get out of the discussion. I just faxed the offer, but I made it about 3K lower than I was going to... for that very reason. This is def a gut job. I have a feeling my airless paintsprayer and about 20 gallons of paint should do the trick...

    I hope anyway, I'll keep you all posted on the progress.

    And Jon, I should have bookmarked it for later. It was just up on the forum about an hour ago, but I'm blanking on which topic...

    Podcast Guest on Show #112
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    16y

    $10K in rehab seems on the low side. How big is this house? I did a 3/1, about 950 sq.ft., with a complete down-to-the-studs kitchen gut but not a complete bath and spent about $17K. Now I fully rewired and replumbed the kitchen and utility room with licensed contractors, so about $4500 in labor there. But you may have some of that sort of thing, too. No doubt the city is aware of the fire and may have special remediation that needs to be done. The place might even be condemned, or on its way to being condemned. I'd call the building department.

    Have you looked in the attic? If it burned through the roof, I'd guess you have somewhat more extensive damage in the attic.

    Still seems like a good deal even at $40K.

    1Reply
  • Mark UpdegraffBusiness Member
    OP
    Real Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 689 votes
    16y

    Thanks Jon,
    It is ~800 sq ft 2 bed (one is pretty small)
    1 bath. Plumbing looks OK.
    Kitchen & bath need pulled back to studs, but the rest of the house is OK as far as I could tell. I am going back to investigate the roof a bit more, with the weird random guy with ghetto contractors claiming to have already bought the house, we did a quick eval and got out (had to break the door in b/c he changed the locks).

    Thanks so much for you time!
    Mark

    Podcast Guest on Show #112
    Updegraff Group Realty4.745 Reviews
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