Newbie rehab questions

[Thomas Thompson]

Good day everyone. A bit about myself... I'm a carpenter/GC. Thanks to an inheritance, I'm now in a position to get into rehabs, something I've wanted to do for many years. I've spent the last few weeks getting an education (books/forums/guru courses, etc.) though I'm sure that's going to go on for years. I've joined my local REI club (unfortunately, just after their last monthly meeting so I've yet to meet anyone.) I have another carpenter & helper on board & willing to work at reduced rates for the 1st deal in exchange for giving them steady work down the road. Got a money backer who'll qualify for a mtg. if I'll put up the cash for the rehab. Everything's coming together nicely but I had told them up front it's probably going to be a couple of months because I wanted to start out bird dogging to get some hands on experience.

Then this (rehab) 'deal' just fell into my lap.

The house is on the outskirts of a small city (pop. 30,000). It's within 1/2 mile of a prosperous community college. Not a great neighborhood, but by no means a bad one. Quiet. Cookie cutter houses built in the 50's. Small lots - tiny ranch houses (900 - 1500 sq. ft. though 90% of them are 1200 sq.ft. or under).

Per Zillow (take it with a grain of salt, I know) seven homes surrounding mine range from 158 - 195k (4 of these are only 900 sq.ft., 2 are almost exactly the same size with same # of bdrm./bath & values are 179k & 185k, with the 195k being 400 sq.ft. larger. My Realtor puts the values at 200k. There is also a house right across the street on the mkt. for 149.5k that is a flipper (pretty much only cosmetics/updated kitchen per an online virtual tour.)

My house. 1140 sq. ft., 3 bdr./1 bath, 0.2 ac. Needs rehab. (realtor) $59,400. I did a drive by this afternoon. Alum siding in good shape, roofing ok. No broken windows. Didn't look bad at all from outside though I couldn't see the back. I've set an appointment to go see it Tuesday. Nagging fear - per zillow, this house sold for $121+k six months ago! What could've happened to drop the value 60k in that short amount of time? I suspect winter freeze & broken pipe. I'll find that out Tuesday.

Concerns... Scott (my carpenter) & I are going to look at the house together Tuesday. We will immediately see 95% of anything that needs attention. Various inspectors will hopefully catch the rest. Between the two of us, we can fix anything but neither of us has ever been deeply involved in estimates/material costs. How do I come up with a fairly accurate number for the total rehab costs other than breaking out a pad and pencil & spending an inordinate number of hours online checking prices?

70% rule dictates AFR of 160k minimum. I don't want to use a higher number because should I elect to go for this I intend to put it on the market for below mkt. value in order to move it quickly. Comes out to 112k minus cost of rehab. Even paying the asking price (isn't gonna happen) that leaves $52,600 towards rehab/holding costs. I sincerely doubt the rehab will come to 50k for a house this size so the house is already at the formula highest offer price.

58k mtg. (plan to offer 50 cash) = $307/mo. Taxes (comp for sale at 149,500 = $5143.) Approx. PITI - $723/mo. Hold until sale 4 months = $2892.

Inspections - $1200 (just a guess.)

Labor - $1200/wk for Scott and helper. I work for free. City code requires licensed plumber/electricians. (can't approximate this till I get inside.) Regardless of what we find inside it should take no more than 6 weeks max for a house this size. ($7200 labor w/o plumber and/or electrician.)

Closing costs x 2?

Allowing 5k for closing costs & 4k for plumber/elec this leaves a profit potential of approx. 32k provided rehab cost doesn't exceed the $52,600 figure mentioned earlier. (minus anything I've forgotten.) Will put back on mkt. FSBO with online/local paper/bandit sign campaign to avoid realtor fees.

Any costs I'm forgetting here? Suggestions? Is this a good deal like I think it is or am I just an overly excited noob?

I'll give you an update after I see the house.

Thank you for your time.

Tom