Hello all … NooB here looking at his first investment/rehab and would like to see what others think about this deal. First off, I live in a small city 35 miles n/w of Pensacola, FL and 35 miles n/e of Mobile, AL. I found a 3bed 2 ba 1900sq brick home situated on 2 lots ( one a corner lot) 2 blocks from the hospital in a middle class neighborhood. Only 4 blocks from my home. It also has a 30 x 20 workshop unattached in the back built with the same brick as the home. Looks beautiful on the outside. New roof, new heatpump/AC.
Both bathrooms need updated, kitchen needs refurb’d, needs carpet wall repair and paint. Comps are 110 - 140 and the tax assesment is 98,500 which is normally 60 to 70% below ARV from what I know of my area. The house has been empty now for 1 1/2 years. My realtor says she has shown it many times but the people all want a “move in” home and not one they have to repair. She tells me she can sell it for 120k easy if it was fixed up. The owner lives 100 miles to the north but from what she says he is firm on his bottom price of 70k.
Here are my thoughts, I could split the lot since it sits on 2 lots and either build on or sell the corner lot while I am rehabbing the home. I can see 2 opportunities here, but as many first timers I have read about in the past month of research, I am not sure if this is “The One” to start with.
I just ordered Scotts “Rehabbing for Big Cash” course but do not really want this to get away from me if it is really “The One”.
Also, I do my own rehabbing. I rehabbed my own home after hurricane Ivan destroyed it. I just completed building my own solid birch kitchen cabinets the other day.
Get it under contract. Offer $60,000 to start and see what happens. You have room to make money even at $70,000 if you can keep the rehab costs around $10,000 to $12,000 not even considering the extra lot which could be a big bonus. You may as well build on it to make even more profit.
Be sure the house is not built too close to the lot or even over the line. Have it surveyed.
Figure paying yourself for your time in the rehab costs. Doing it yourself will save money but do not work for free. I have made this mistake before and ended up hiring the labor to get the job done as I was too busy with another project.
What about financing? Will you use hard money or do you have another source?
Thanks for your input … I am not sure yet about the financing yet. I was waiting until I received Scott’s course to get an idea on which way I should go. I have good credit and a home with good standings. So I am not sure yet.
I hate being so lost, that is why I was waiting until I received Scotts course. I figure it has been empty for 1 1/2 years, I can wait for 2 more weeks.
I just got a Rehab course about two weeks ago (I wanted to see what the sales pitch was all about). I found out about something called hard money lenders (I had used private money before). They lend you the money to buy and rehab the property based on the ARV (After Repaired Value). I am currently in contact with one now, and it seems to be getting very interesting.
If you think you are nervous to do this project alone. I have been investing since 1992 and have done some rehab projects in NY (mainly rentals). I now live in SW Florida and I am continuing my investments here in Florida also.