I am just trying to get started in rehabs and want to make sure I am not missing anything. This home is a family estate and has been appraised as is for 246k. The comps in the area are 289k-299k. I estimate the rehab to cost between 10-12k and would expect to list for 299k. The home already has all major updates including roof, electrical and plumbing. The only thing that remains is cleanup, painting, redo the kitchen and add new appliances. The family is considering listing it for 250k as is.
Since I am a family friend I can buy the home for what they offered to another relative at 240k. I may even be able to work out a longer settlement date to allow me to complete the renovations and get it on the market. I calculated making around 26k once completed taking into consideration, realtor fees, rebab and settlement costs.
Am I missing anything? Does this deal make any sense?
don’t pay more than 210,000, if you want to make any money. look at it this way, if you’re into the property for 256,000 - that leaves you with just around 40,000 in “equity”. but that’s a pretty lean margin.
it doesn’t offer much in flexibility. how’s the market? are houses moving? get some CMA’s and look at what like size, age etc, houses are going for - really make sure the CMA’s are tight, and not all over the place.
also, check and take a gooood look at DOM - Days On Market.
if all that looks super nice and your market area is kicking butt, well then, you may want to offer as high as 240,000. if you want to be an investor, that’s how you do it - pass on it if it doesn’t add up to an investor outlook.
other things to consider - who’s making repairs and how long will it take to make them? how good are your repair estimates? what are the local codes for permits and such? do you need any? what exactly are the circumstances behind this sale? has the house been vacant for a long time?
who’s giving you the loan?