OfflineHey everyone. Well I'm kick starting my real estate investing into gear. I have a real estate agent who is an investor himself and is looking for properties for me and we are doing the 25:1 strategy right now. He is looking for homes for me in Rochester NY, I am at school about 1hr 30 min south or Rochester. We are just getting started and looking at properties and I am narrowing them down to 25 to 30 that I like. Making offers on them 30%50% off asking price so that is all going well. But I have a single family home that I am interested in near campus that I need advice on.....
The home is a 4 bed 2.5 bath. It was bought by a student to live in and when she graduated last year she did not winterize the home. Bad mistake. The furnace is shot the pipes are all gone int he bathrooms and the basement has mold on the drywall. The basement needs to be stripped of the drywall, the pipes need to be replaced but the bathrooms are all inline with basement first floor and second floor so this is convenient. The house inside and out needs a fresh coat of paint. The kitchen needs new appliances and maybe some counter tops. A few of the bedrooms could use new carpets. The yard needs some trimming of bushes and trees. I figured it would cost about $15,000 to $20,000 in repairs. The house is assessed at $116,000 and its listed for $79,900. I made an offer of $51,500 and they countered at $55,000 or $60,000 if they strip off the dry wall. The house could be worth over $100,000 if the repairs were made. I can rent the place out to students but because of zoning laws I can only have 3 students there. it would be better suited as a rental to a professor or a family. Let me know what you think I should do. Should I try and lock it up and assign the contract or try and do the rehab and try and sell or rent when I am done. I am getting my MBA full time so time is def an issue. Thanks for the advice...
Mirza
I think you are way underestimating the cost to fix this place up. with the mold , new appliances, hidden damage, carpets, pipes, repairs, paint, etc. you shouold allow more like 40,000 to fix this up unless you are doing the work yourself(not while getting an MBA) Make the offer accordingly. i see little profit in this deal. If i'm wrong you have more profit. otherwise too much work for too little gain.
If the mold is not in the wood It would just need new drywall. Appliances, Furnace, and new pipes. The paint would not be that much I have tons of college kids that would be willing to do the work for not that much money.
Paint outside and inside: $3,500
New Furnace: $2,500
New Appliances: $4,000
New Pipes: $ 6,000
Carpet and Yard work: $3,500
New Drywall: $ 3,000
Total: $22,500
Let me know if I am wrong in this thanks
http://sip.usapropertywholesale.com/
I would allot 50% to your figure ($22,500) for any unseen costs (rotten wood, underestimated quotes on repairs by contractors,etc)involved with your renovations. Are you going to add an a/c condenser for cooling?
Paint outside and inside: $3,500
New Furnace: $2,500
New Appliances: $4,000
New Pipes: $ 6,000
Carpet and Yard work: $3,500
New Drywall: $ 3,000
Total: $22,500
Let me know if I am wrong in this thanks
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