deal or no deal

Sounds like a great deal if ARV is 65K and purchase and fixup is 29K thats better than 50% I usually consider 30% discount as good. Be sure your numbers are correct and go for this one. Keith Success be with you!

You need to figure out what the house is worth to you. $15,000 doesn't sound like a lot, but it could also end up being a tear-down, which is not something I would wish on someone doing their first deal. I know you are figuring 12-14K to rehab it, but what is that based on? Have you done a walk-through with your repair/replace list and then priced everything out? You have mentioned that the most expensive room in the house, the kitchen, needs to be put in, as well as a bath and heat and air. I mean, a kitchen alone can eat up the entire amount you are figuring it would cost to rehab the entire house. Have you added up building materials, labor, holding costs? You also have to allow for the possibility of a mold problem. I'm assuming this is an older home, so that darn Chinese drywall should not be an issue. Does it need new windows/doors? What are the neighborhood comps?

You don't state what your intentions are for the property once it is rehabbed. Will you be looking to sell it or put tenants in?

What is the square footage of both the house and the lot? Generally, investors want their houses to be 3/2s.

Do you have any idea what the circumstances are behind the homeowners desire to sell?

Have you established a relationship yet with a real estate agent? Mine is great, and when I find a place I'm interested in, she runs it through her title company for me. That way I know if there are any liens against it. This is really important information for you to have.

Just wondering who will be doing the repairs and the remodel on this house? How much is labor and materials going to cost you? Then you will know if you could make a profit. This is a big undertaking for a first project. If you want to buy and rent a house, look for a property that just needs paint, cleaning and minor repairs. This would not require the amount of effort you are looking at with the house you have mentioned. Then you could rent it out and wait for the prices to go up before selling. In the mean time you would be getting a cash flow. Good Luck and Blessings to you.

Kathy Van Dyke, California

The cost of the rehab is often more than you think. I'm saying this from my very first experience. I bought a 2/1 house at a smokin' deal of $35K and thought I could rehab it for between $10K to $15K. By the time I finished I had spent over $20! My agent says I should have done it for less, but I guess it takes experience and knowing all the right people to get it done for less.

Then...since the market is so down, I've had to keep lowering my price to get it sold. (Probably because it's also harder to sell a 2/1). I finally accepted an offer and after all commissions are paid and holding costs are deducted (not to mention that my insurance will run out before I close escrow and I will have to purchase a new policy), I will end up with around $5K in the bank. Still a successful deal, but not nearly as much as I thought I would make.

Really check out the comps that have sold in the area and have a professional look at it. I looked at another house for $25K and a contractor told me it wasn't worth it because I would have to rebuild the whole thing.

Good luck with this! Let us know how it turns out.

Thanks guys.. I actually seen the deal on craigslist so i haven't done anything with it at the moment. However b/c i'm so new i was looking to just assign the deal to another investor in my reia group. So I was wondering did the numbers look right. All of the info i have is just how the person selling it wrote it on the site. Thanks for all the input guys:)

Don't get emotionaly attached to this house. The numbers look right but based on what? Have you seen the property yourself? Do you know the area very well? If you can't find a buyer/renter, would you be living in the property? Or would you rent the property for yourself? If you can't rent it for yourself, that means is that the property is not in a good neighbourhood which will cost you money. Make sure you have a contractor who can give you a free estimate to fix the property and add at least 20% from what the number the contractor gave you. Most contractors give you a low number to get the job but once they get the contract they come up with a different number.
Good luck

Just on face value, it looks like a great deal

Now adding in all the stuff everyone mentioned, its still something you can get a check off of.

Best case scenario, someone who is going to buy this is has an idea of what they are getting into, so you may not need some deep long winded report on repairs. Have someone look at it and give the best possible estimate they can.

There's treasure in trash sometimes and maybe you found it. Research a little more and then proceed

Good luck

Thanks Bariafl and elixbrown

Because i'm new to this i don't think i'm going to do the big job.I'm looking to assign contracts or wholesale right now to other investors then they can find the right contractors and do what needs to be done. Thanks for the advice i will apply it to my bigger projects as i gain experience. I hope it is a good deal for assigning i could use a little extra cash.

Any updates on this deal??? Hope its gone well

Hey elixbrown

Spoke with the seller Saturday. Im going to run the numbers this week and I'm working with another investor that has end buyers so him and I will split the profit if all of the numbers look right.

This was a deal i ended up missing out on. I was trying to work out the deal with someone who had more experience and he waited to late to run the numbers and the house sold on last Thursday. If anyone has advise on how i should handle deals more efficient by me being so new and no deals under my belt,feel free to leave a comment. Thanks.

I don't think you did anything wrong; seems like you just had a partenr who took his sweet time and didn't get the deal done

Could it be he had it bought under your nose and someone bought it and then he will buy it from them??? Drive over there a few times over the new few weeks and if you see him there, then you know

elixbrown I was thinking the same thing..well i emailed the seller last night and asked him who brought the property and he advised that it was a man from another town. So i'm hoping it wasn't the one that i was working with.