Profit - $62 to $72k (before fees, commissions, etc.)
3bed/1bath 1204sq ft.(will be increasing the sq ft to around 1400 w/ a 2nd bath) $68 per sq ft.
$160 per sq ft avg for neighborhood (mostly 2bed/1bath, 2bed/2bath, or 3bed/1bath)
Now this property is going to need a full rehab.
Please give me your thoughts on this deal.
Thanks,
Scott
Assuming your ARV and repair numbers are correct. Looks like a good deal to me. The other thing to look at is your exit strategy. If you plan to sell to a retail buyer, what is the typical DOM (days on market) in the area. Make sure you consider your holding costs.
Have you done a project home before because that is what you are talking about? That’s all I do but I pay dirt for them. Make sure your numbers are dead on or you could be upside down in a hurry.
I have 2 exit strategies.
Put it on the market as soon as it is done.
Move in and keep it as my home.
I am currently renting and originally wanted to buy it, fix it, and then live in it. However, I feel that I could make a good deal of money off of it which would help in future deals. If I have to live there, that won’t be a problem either.
As far as repair costs are concerned, that is the projected budget, I also have an “Oh sh*t” reserve for whatever comes up. I would like to stay under 50k though.
Scott
Based on recent sold comps, I should have no problem getting in the range I provided. I also included a 3% drop in price for the time it will take to rehab. It is an old 1926 bungalow that is going to need a new roof, electric, plumbing, kitchen, bath, etc. I am going to demo the whole inside, sub out electric, plumbing, roof. I should be able to do the tile, floors, subflooring, dry-wall, paint (interior & exterior), etc.
I am in Florida and based on my research, $50k should be enough. Any thoughts on that?
Stick to your budget, stick to your budget, stick to your budget! Try to buy all the materials yourself and have them there for your contractors. This leaves a contractor with very little to argue over with regards to a time plan that you two have worked out. I’ve also read that some people pay their contractors or subs in installments based on time and completeness of the job. Just some things to keep in mind. Oh, and plan on something else going wrong.
REI Chris is correct. The method I use with my contractors is on a completeness scheudle. They get paid per the value of what they’ve done. These numbers are set between the contractor an myself prior to beginning the job and I also throw in a time contingency. So after a certain time period I begin to deduct 2% per week late. It helps to separate the creme from the crap so to speak.