Possible First Rehabb Deal
I am a new investor in South FL, I have been researching and reading books for a few months now and decided to get my feet wet. Thank God for this website.
Here is my deal, a real estae agent found this house that needs to be rehabbed. From the looks of it the previous owner ran out of money and could not finish. The house is in a really good area but it needs some work to finish. Completed work is both baths have been completely redone, he added a new prch area in the back which has a roof but no framing or flooring and he has removed the old kithcen and built a new area for it but has not put in cabinets or appliances. Here are the numbers
asking price 269,000 4bed 2 bath 2600 sq ft
comps on the same street have sold from 500,000 to 550,000
rehabb costs will be around 50,000 but need to verify w/ contratcor
I know that it may not be wise to be doing a big rehabb when you are a newbie but the house has a lot of pontential and I don't want to reget not doing it. Any advice or recommendation wil be greatly appreciated
Good Day to you:
Couple of questions: Do you have the ability to do the work yourself? If not, get some down and dirty quotes before you commit. I'm guessing once it if done you will sell it, correct? Homes in that price range should have upgraded carpet tile, etc, so up your estimate. Remember, you make money in RE when you buy, so make them an offer that will give you a bigger cushion.
YES, it's a big undertaking for a first time, but it's possible to make out OK on this one.
Good luck and make $$$
Tom
Let's get serious here. Unless you are in an area that defies logic, your numbers are off somewhere.
This deal will make you $180,000 to $230,000 in profit according to your numbers.
Are all the other investors in your area dead? Do you have an inside track on this house that no one else can get? There are plenty of rehabbers that would do just about anything to do this deal and for a lot less, how about $100,000, $50,000, or even $30,000 in profit.
For a $230,000 profit in six months I would move to your home town to do this deal.
The numbers are way too good to be true, you are off by a huge amount, either on the rehab costs or the comps I would say.
Take a closer look, you are missing something very big.
Thanks for the reply guys. I will be hiring a general contrator to get the work doen, in fact I will be meeting him today to get an estamate.
There is a saying " If it is too good to be true..then it probably isn't". I have no idea why more investors have not jumped on this property. I am going to continue my due dilligance. SO far, I have look at the public records and I know how much it was bought for, I have run two CMA's to double check. I checked out the neighborhood and looked at the house and I still do not know why. If there is something up w/ the house I will find out. Do you guys have any other suggestions of what else I shoudl be doing?
surprised you haven';t gone in to talk to the building inspector or the town clerk at the towns municiple building to ask questions.
A simple inquiry as to what's up with this place will often reveal all the problems and details. If it hasn't been sold to a friend of the building inspector, a local lawyer or home improvement professional in that area- before it got into the hands or a realtor....I'm sure someone else has a more complete picture of what's up.
Perhaps the construction was fouled up or permits not taken out...rather than deal -the owner says sell. You may have more work than you bargained for.
good luck
allan
You need to make sure your comps are trully comps for this house.
With as much money in the spread as you are describing, you could let the US government rehab this house for you and still make a profit. I could show up blind drunk every day and still make money. I could hire a band of roving monkeys from El Salvador and still make money.
Maybe the house is sitting on a EPA superfund site?