I am looking to make deals on all the boarded up homes in my neighborhood by flipping them to a set of rehabbers that I have lined up. Only problem is I want to follow the formula of 70% of the ARV - repairs. Sounds like pretty simple math but how do I come up with the $$ amount for repairs if the home is all boarded up…
I don’t do rehabs as yet, but I’ve been quoted some figures by some who do at extensive rehabs at $8 to $10 sq. ft. I would assume that doesn’t include HVAC. Some of the more experienced guys may have a better figure.
So your saying if the home is 1200 sq ft then you do the math 1200 X 8= 16,000 worth of rehab?
No, he’s saying that a 1,200 sq. ft. of house would take approximately $9,600 to $12K for a rehab, not including major mechanicals.
I personally think this is a little low if the property has been boarded a while, if you are in a high-end market (where expectaions of rehabs are higher), or if you do other than the basics…
There is absolutely no way to guestimate what a rehab will cost without doing your homework. You will need to go look at the house and find out what it actually needs. Some boarded up houses require very little (maybe $4k to $5k) for a few windows, paint, carpet, and cosmetics. Others need absolutely everything. I’ve purchased houses where the furnaces, water heaters, cabinets, and just about everything else are missing. These houses can require a $30K to $40K rehab.
You seem to want to become an investor without doing the work - i.e. someone to find the house, easy formula to figure costs, etc. It would be very nice if this were the reallity of real estate investing - but it isn’t. If you can’t or won’t put forth the effort, you’ll never get the results.
I remember someone posting that their JOB was KILLING THEM! I remember someone that wanted 20 houses in 2 years. Now, you want someone to do all the work for you. Give it a try, but it won’t fly.
yep, there’s too much to think about behind those boards to think you can drive by the house and calculate rehab costs based on the size without looking at it.
i have a perfect example of that. I found a house that was REO, the bank was asking $40k for it. It was a very nice house on the outside. new vinyl windows, a combo of brick and vinyl siding, and clean as could be. I thought i found a great deal. then i finally got to inspect the inside.
apparently, the previous owners knew foreclosure was coming, so they took a sledgehammer to every piece of drywall in the place. they also did what mike said, and stripped all mechanicals and appliances, as well as the kitchen cabinets out of the place. i would have been able to buy it for $30k probably, but it would have been another $30k in rehab. the ARV, i estimated, would have been $60k, so there was no deal there. i expect that house to sit vacant for a very long time. if i had relied on the outside appearances or a formula to buy it, i would have at the very least wasted a lot of time, and worse, possibly gotten burned badly.
besides, what the experienced guys say is right, there is no substitute for becoming an expert property inspector. i’ve learned a ton in the past 4 months just doing inspections on my own and with people who know the business. i still have A TON to learn, but I feel like i’m getting there.
Never meant to imply that formula replaces inspection. Formula merely a starting point.
Yea exactly, speculation is what I would use the formula for. The reason I asked this question to begin with was if i drove by a home and it wasnt for sale, I’d want to guesstimate if it was worth contactign the owner and what I would need to get it for. I guess the only way to determine price is to actually take downt he boarding and go inside to see the price.
I of course would never do this myself, nor recommend anyone else do this
but boarded up doesn’t mean it’s impossible to enter. Check for unlocked windows or any other means of entry so you can get yourself a realistic estimate on repairs.
This will be viewed when the police come as simple tresspassing or, more probably, breaking and entering…
exactly thats why I asked the question…What you guys think I should do?
Of course, Keith, that’s why I wouldn’t recommend or condone it. However, for some people it would be a better/lesser risk to climb in a boarded home for a look around than it would be to get yourself financially involved in a deal that’s going to send your business down the toilet b/c there are surprises inside.
That’s why there are contingency clauses in real estate contracts!
Why are you looking at Meth Labs anyway?
Look for some easy flips first, don’t get involved in these 50K renovation projects. Expecially your first deal. Remember, it’s cheap for a reason.
Well I feel its the only homes on Long Island that I can get for 70%…well mb thats ignorant of me to say but its a much ebtter chance for me to get it cheap.
I may have foudn my first deal however, calling today to check the home out.
Here is my off the wall thought about it if you are going to offer on these houses doesn’t that mean you need to know who you are going to send the offer to? so at that point in time you are in contact with the Realtor/owner anyway I am willing to bet that who ever you submit the offer to would also have access to the property!! I don’t know just a thought!!!
Sometimes your thought process is just sooooo bizzare, Robb!
Pretty crazy!!! On the other hand really BASIC!!! LOL