Property FMV is $42,500
I want to offer $20,000
Use the difference for the repair: $22,500
Its a shell with some usable areas. But extensive rehab, but my godfather is a general/roofing contractor that will do most of the rehab for almost free, I just by the supplies and the other work I have a good guy that will do anything for cheap. He painted my Den, Kitchen, hallway, foyer, Den (colors) for $150. Tiled back splash in kitchen for $180. Very nice work and he lets you pay in installments
Let me know if you guys think this is a good idea.
If repairs will cost $22,500, how will you make a profit?
either sale the property for arv, fmv, etc. or rent it out to cover the new loan amount. Is this strategy ok?
I have personally done quite a few rehabs of various sizes.
There are qui e few factors that paly into this, but assuming it a relatively small house here some things to thing about:
Do you have the CASH to buy the materials? (or enough credit with Lowes/HD to take advantage of one of their interest free offers; if you plan to sell?)
What is the status of the infrastructure(i.e. electrical, plumbing, heating). Fixing these can be very expensive (even for small houses)
Kitchen and bath-they can be quite expensive even for materials- small bath ($800 and up); small kitchen ($1500 and up). This does not include labor which can be 2-5x of materials.
So, your desciption of “a shell” is a bit worrying. I just did a “minor” rehab of a 600 sq ft house (inside only) and spent $3k on materials and 200hr of labor (myself). Its rentable because the area hwere it is hot, but not sellable (would need more exterior repairs). Those trips to Lowes/HD to buy material add up real fast.
Best of luck