Need Help With First Offer
I am about to make an offer on my first investment house and wanted to make sure I have accounted for all costs.
The house ARV is 158K and is on the market for 130K. I am wanting to make 10% profit.
My formula is ARV-Profit-Closing(Buying)-Closing(Selling)-RE Commision buying(HUD Home)-RE Commsion selling-6 months mortgage(avg DOM is 90 days)-fixup cost.
Is there anything else to factor in? The house looks horrible, but it is all purely cosmetic(missing 90% of base boards, holes in wall, horrible paint job with paint from walls running down onto base boards and carpet, stained carpet, stained linoleum, Walls need paint.) The house was built in 1999 and appliances are in good shape, no foundation problems, structure seems solid. My estimated fixup cost is $6k. does this sound low for this house. This does not include labor as me, my wife, mom, and dad will be fixing it(labor cost is being recieved as profit). The house is 2500 sq ft.
My bigget concern is that I am missing something.
Add insurance and Taxes in there... And, I think that 6k is too low for rehab for all that you listed. You have had a professional house inspector inspect it, right?
If you are experienced in buying products for wholesale rather than retail you, I do think you can get the job done for $6000 assuming the home isn't too large.
The profit i have estimated is $15.8K and my goal is to make atleast 10k in profit. I have increased my profit to give some cushion since this is our first rehab house. If we have to I am willing to spend the additional 5.8K on repair to bring the profit down to 10K, but i dont want the profit to go under 10k.
I did a walk through of the house room by room and listed everything i saw that needed to be replaced. There are a few things that I have not yet accounted for in fix-up because I am going out to the house one more time before bidding. These additional items are going to run about $1K. The only items that will be installed are carpet and linoleum. We will do the rest ourselves.
The biggest purchase is carpet and linoleum. I have estimated $4000 for carpet(1.44/sqft installed) and $450 for linoleum. Do these figures sound right for a 2500 sq ft house?