Is a house ever too bad?!?

19 Replies

I just looked at my first house and there looks to be absolutely nothing salvageable!!! What would be an estimated cost to redo an entire house with swimming pool?!?

depends on the square footage you can estimate cost per square foot but it depends in the materials your using and what they cost in your area, when you say not salvageable what do you mean exactly?

You may want to consider reading J Scott's "The Book on Estimating Rehab Costs" before you dive into that project. There's quite a bit that goes into a complete tear down.

Well, if you're wholesaling, condition should only matter to the investor.

That being said, in a case study that I read about (this is is Milwaukee) a guy put under contract a BROKEN down home for $4,000. He later wholesaled it to an investor for $11,000 giving him a spread of $7,000 minus whatever costs he faces as a wholesaler (usually at most $800).

However, if you're looking to make it an investment property then that's when condition matters. For the right price, (remember, you want to be fair by including that it wouldn't cost retail because of the condition) you can hire out all the work. Cosmetic work isn't expensive, per se. However, the most expensive starts to arise when you're looking at pool revival, roof replacing, foundational issues, and plumbing. 

Good luck with your property! 

If this is the first house you looked at and you are just starting off, I would not move forward unless I had some trusted professionals to give me some advice as far as rehab costs.  Good luck!

If you looking to salvage the entire home, I'd probably look elsewhere. That type of project can to difficult, costly, and filled with surprises unless you've got a knowledgeable team in place, I'd move on.

Yes, a house can be too bad to invest in...

Just because it's cheap doesn't mean it's a good investment...

As a wholesaler, you need to be able to determine what the property is worth to a rehabber or a rental buyer...

If you can't estimate rehab costs or don't have someone on your team who can estimate rehab costs, you probably shouldn't be wholesaling...

As David mentioned, pick up Jscotts book and educate yourself on estimating rehab costs & you will be much better off in the long run.

@Sandee Sampson there are very few properties that aren't salvageable in some fashion even if that means tearing it down and starting over. It's mostly a factor of cost to remedy and acquisition price relative to the value after its done.  

Here is a thread on a really bad house that'll probably make the one you are looking at seem like a simple project.

 http://www.biggerpockets.com/forums/223/topics/133...

Nevertheless, the complexity of any project you are contemplating should be commensurate with your experience.  Don't bite off more than you can chew, and get the advice of an experienced contractor (and some quotes too) before proceeding.

It depends on what your other options are. If you can make money on it, fine. But if there is an easier deal, then I would go for that. The cost of a rehab will depend mainly on how expensive your labor is. It helps if you know how to do a lot yourself and can train cheap labor to help you.

Define bad[pics or a video link would help]?

If its just stinky and cluttered with all sorts of trash and garbage that doesn't count. That's normal "contractor's special" type of investment property. However, if the foundation is unstable, which often the owner would know (and by law must disclose)and the numbers won't equate to a flip for profit as its in a low-rent only neighborhood, then it may be a teardown. If you are looking to wholesaling, rent or flip it you will need to find out whether its a teardown or not. Some investors will still buy it as they want the land to flip or rebuild on... My coin.

Kudos,

Mary

Originally posted by @Bryant Moran :

Well, if you're wholesaling, condition should only matter to the investor.

That being said, in a case study that I read about (this is is Milwaukee) a guy put under contract a BROKEN down home for $4,000. He later wholesaled it to an investor for $11,000 giving him a spread of $7,000 minus whatever costs he faces as a wholesaler (usually at most $800).

However, if you're looking to make it an investment property then that's when condition matters. For the right price, (remember, you want to be fair by including that it wouldn't cost retail because of the condition) you can hire out all the work. Cosmetic work isn't expensive, per se. However, the most expensive starts to arise when you're looking at pool revival, roof replacing, foundational issues, and plumbing. 

Good luck with your property! 

Thanks Bryant! I really want to do my due diligence so that I can be sure to buy at the right price ...I'm putting it under contract and will have GCs take a look. I posted pics in the thread...

Wow! This forum is awesome! Thank you! 😊

Of course I will seek the help from GCs to get bids; I plan to wholesale this one as I think it may be a bit complex for my experience level (or lack thereof) 

I'll use the BP WS calc and put it under contract. This is very exciting!!! 😁👌

Thanks again everyone!!!

The brick seems to be the only saving grace on the house! LOL!

If everything is structurally sound..it seems like a great candidate and education for a flip!

Price is what you pay, value is what you get.....

You can wholesale it to a rehabber if worse comes to worse.  

Rehabbing alone for the first time is always risky, so I think it's important to work with a more experienced rehabber.

Yup there is looks like you just found one lol. 

Personally, That's the kind of house I look for. Someone did most of the demo for you. 

I saw a house here a week ago where the slab is failing.  I think an investor had bought the house based on some work being done inside and all of the flooring being removed.

I also think the investor did not realize what they were buying.

The MLS listing indicates "do not make an offer that is 1/2 of asking price". I believe this may be an investor who is about to lose big because I do not see how you repair the slab and salvage the house.

The house I speak of would not be too bad if it had been purchased for about $40k (the value of the land).

Your question about what would it cost is too vague.  In my many years as a construction estimator, I explain your question this way:

You go into a car dealership and ask "How much is a car?"

Well, are you talking sports car, family sedan, SUV, truck?

Entry level, mid grade, luxury?

Manual or automatic?

Hybrid, gas, diesel?

I hope you see what I am getting at.  Many variables go into pricing construction.

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