Not a good deal or just a bad neighborhood

4 Replies

So I took the approach of going after a good deal to bring in the cash buyers (as opposed to building up a cash buyer list first). So now I have a non-mls property under contract (7 days) and no buyer yet. It's in a rougher part of town and according to my calculations, it'd be AT LEAST a 20% ROI.

If I had cash, I'd do it myself, specially since I won't have a wholesaler's fee in the middle. I've advertised here, craigslist, and even FB groups.  I'm about to let other wholesalers and realtors into the deal but my question, I guess, is:

Do rehabbers generally stay away from rougher areas.  I mean, the smaller houses I assume are quicker flips and considering the low prices...wouldn't that mean low risk, high reward?  Or maybe my numbers are just wrong but I'm pretty confident they're not.  Any thoughts?

What are your numbers?

Please include valuations from whatever source you used

@luis lopez 

In my experience it is usually 1 thing the numbers are off maybe not as good as you think. There are different types of investors many who dont mind war zones. What are your numbers?

Sure...I just didn't want to bombard the first post in case no one was interested in the numbers and just wanted to provide general insight (e.g. good deal in poor area vs mediocre deal in great area).  I also hope this is not "advertising".  I already had posted it in the marketplace (for the moderators).

Anyway, here they are:

  • Asking $75,000
  • ARV 120-130K,
    • based on REDFIN recently sold properties last month within .75 miles. I looked for the properties that looked like they had been rehabbed
    • On my 1st post, I mentioned including realtors becasue I will start to reach out to the buyer agents of those sold in this area
  • Repairs $10-$15K
    •  I'm estimating $15K, on the conservative side IMO. The house is almost 1100 sqft.  Demolition involved to remove walls illegally partitioning this house into 3 units.  This includes the garage that was closed off.  In fact, someone in the garage (paying 700) can continue living in there while the rehab takes place.  This person would protect the house and obviously help keep the costs down.
  • Average Rent for any interested landlords is $1330. 
  • Est. holding costs and fixed costs (assuming 3 month flip) is approx $11K. 

I think I covered the basic there.

The numbers seem a bit concervative and thats good. I would just market more aggressively. Include previous taxes and a break down of the repairs needed. Have your own signs outside the house etc... it is the holidays so it might just be bad timing

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