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Demolition or rehab?!?
7 posts by 5 users
Mathieu F.
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Hi, new here and to REI, I tought I was gonna book my first deals in FL but turns out 1 landed on my lap this week and I just spotted another 1 today by taking a shortcut to avoid traffic. The one I spotted today appears to require quite alot of work from the outside, I've seen it before but it wasn't for sale and the brush and over grown trees hide the house pretty well. The location is ideal, close to highway, school, train... I have yet to contact the agent advertising it. I'm curious to see thow much cash to spend on repairing the house, what % of cash should one spend for repair on the purchas price. Don't know if this is making sense to some1. My english isn't that good |
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Stephen L.
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I think the rule of thumb is 70% of the after repair value - rehab cost. So in your example, if you fix it up you find other comps in the neighbourhood go for 250K in the same condition. Lets say to get it to this condition it will cost you 50K. You take the 250,000 X 70%=196000. 196,000- 50,000repair cost=$146000 the price you should offer for the house. I hope this is clear. Steve edit; I just re-read your question... I don't think there is a percent of purchase price you shouldn't go over when figuring out if it is a deal or not when it come to repairs. |
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Mathieu F.
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Thank you, I wasnt sure if it was 70% of the arv or the actual purchase price. I've never really done repairs before other than finishing my basement @ home, I dont have the $ to finance both houses @ once, so i'll go check it out, but the 1st property is hard to beat. A friend of the family called us before putting it on the market, old house, but sale price of 420k and land valued @ 400k, it's on the water front as well, the house does require some repairs, What do you guyz think of prefabricated homes? We could demolish this 1 and put up a prefab and sell it for a really good profit since the house would have more value than the old 1 in there, although the 1 there has it's charm with high celling and 2nd floor balcony on 2 of the 3 bedrooms. I planned on learning more before jumping both feet into REI, I registered for 3 classes on Real estate in septembre @ university, management, property evaluation and business negociation. So I'm a bit shor handed on REI knowledge. Let's hope for the best, I'll probably be picking every1's brain now and then! Both projects need alot of work, but the potential payoff is good, more than I make in a whole year... Thanks, Mathieu |
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Mel H.Real Estate InvestorJoliet, IL 
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That second pic looks just like a house here in Il. Could it be. Lefty |
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Mathieu F.
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Maybe they look alike, but this 1 is in Montreal 
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Khaled M.Real Estate Investor
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MatInMtl: I am also in Montreal, and I don't know what part of the city this is in, but if its in Montreal then 208k is not much, if it could be repaired for not too expensive that is. This one smells like major profit if located right! Montreal is on the up up up |
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Tom T.Real Estate InvestorSan Antonio, Texas 
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dont go prefab. Figure out how much per foot you can build for and that will tell you if you want to tear it down or not. Myself, i've rehabbed some pretty scary places. Just rip it down to the studs, reconfigure the floorplan and build it back better than new. I vote for rehabbing if the comps show you can make 25% on your total investment after repairs. Good luck and Happy Investing! |
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Posted: 05/28/2008 at 03:35PM
They advertise the house @ 208k, building is worth 145k and land 63k. I would send an inspector, to get all the details and then make an offer if repairs aren't too much. So thats why I need to know how to calculate it. Is there a% of the price that you shouldnt go over when rehabbing? I put up 2 pics, the only they have, what can be done about the brick? Looks awful! Painting brick isn't too popular around these parts, can it be pressure cleaned?
