This is my first flip and I’d like to get some opinions on the deal outside of me and my investor.
I paid $220,000 by a 100% financed, 30-year loan for a pair of adjacent residential properties, both on identical .25-acre lots. One is an empty grass lot that used to have a house until it burned down. The other is a 2-story, 2000 sq. ft., 2-bed, 2-bath house that is very beat up but has a lot of potential. When I say beat up, I mean as in mostly everything needs to go. Siding, deck, kitchen appliances and cabinets, bathroom and fixtures, popcorn ceilings, laminate and beat-up wood flooring, nasty carpets, uninsulated attic, and out-of-code electrical wiring. The roof, plumbing, climate system, and septic are all ok.
It’s not a very hot area but the houses that do sell have been going for anywhere between $130 to $150 per sq. ft., and up to $175 in some rare cases.
Our ideal plan is to fix the house (converting it onto a 3-bed, 2-bath, and eliminating a wall to create a large master bedroom) flip it, and then build a house on the empty lot. Failing that we’ve also decided that we can sell the lot to finance the rehab on the house. Our worst case scenario is selling as-is to the highest bidder.
My investor wants to do the rehab without selling off the lot. We have a good crew available that can do good work for low prices, the only problem being that they’re not the quickest working bunch.
I’m just curious what other RE investors in the forum think of this deal and what your plans would be on a deal like this. What kind of time frame would you say is reasonable for that much rehabbing work to be done (other than as quick as humanly possible )? Is this a deal you would’ve taken or do I have the business sense of a buyer of swampland in Arizona?
Any input would be much appreciated!