Just bought my first rehab property and need advice.

[Mauricio Hernández]

Hi All;

Just bought my first rehab property after 6 month and many unsuccessful attempts.

The profit on this property will be mainly on the addition. ARV is $730K for a 1,700 sq ft (one just sold in the neighborhood for $740K) I paid $495K and I'm calculating $120K for the addition and rehab including architect plans permit and fees. the property have 1200 sq ft and I'm planing to ad 500-600 sq ft. No finance needed. I have a friend that's a contractor and will do the addition for about $100-$120 sq ft and I will hire independent to do the rehab (floors, cabinets, tile, paint) of the rest of the house. I can also have 1 of my guys do the clean up, demo and other stuff like installing fixtures, siding,fence and landscape for $100/day for 2 month. So far that's my plan.

I do have the following questions:

1) I was taking to a framer and foundation guy that was doing work around the area and he recommends that is cheaper to tear down and build a 3500 sq ft house with a 2 car garage for $350K finished. But that will put me on $850k and who knows how much extra since I have never done a project like that and I don't see many houses in this area selling for over 1M or close to it. Do you think that will be the smart thing to do?

2) do you recommend I hire an inspector to perform a full inspection or just have my contractor friend go and look for major issues like major termite damage, foundation or roof damaged? Since I am buying the house as is and with no contingencies.

3) if in fact I find major or unexpected damage to foundation, fireplace, or structure. Can I still ask the seller for a price reduction even though it is a non contingency deal, or what should I do in that case?

4) what kind of insurance coverage should I get for the time I own the house? Btw the house will be on my name as I don't have an LLC yet.

All replies wil be appreciated