I have been working through reading this forum for the past two weeks as I prepare for my foray into REI. I feel pretty prepared aside from the experience of actually getting into action - which I am ready to start now.
I came across a lead on a home in a good neighborhood that was heavily damaged by fire 3 years ago. It’s currently boarded up, and has a fence protecting all rear access. It’s currently listed for sale and I plan to call tomorrow to get some information from the listing agent (the listing agents dont have a website if that means anything in terms of the sophistication of their dealings). From what I’ve gathered, showings are only conducted from the outside - leading me to believe that this home will need a major gut job. :shocked
I know what investors are scared to touch is an opportunity, so I am very interested in doing a deal here, although it may be complicated. I am assuming that the seller has gone through all the insurance related procedures considering the fire was 3 years ago, and the home is ready to go.
I plan on asking for the following
-Documentation can they provide on the fire particularly from the insurance company, including full rehabilitation estimates.
-Asking price and when the seller is looking to close.
Once I have that information, I plan on getting city regulatory bodies to give me information on all city codes that govern the rehab and hopefully get references for general contractors.
Get contractors estimates in writing for all required work.
Figure .70 ARV less all rehab costs (x1.3 for unexpecteds), getting to code, temporary insurance during work (Yes i know not all will do this), my profit, estimates of financing costs (I will have to use a HML), and selling, title, home warranty, and inspections = My MAO. Am I missing anything here?
If anyone has done a job like this successfully, please let me know. I’d like to get as much guidance as possible. I will most likely find a partner for this deal with some similar experience under their belt and cash connections. Wholesaling is a possibility, but I am very intrigued by the profit and learning potential - so being involved is key.
I appreciate any advice from you guys. I studied real estate in college, and currently work in commercial, but I have learned TONS more on this site.