I've found a home that is in very bad shape. The bones are good but will need a complete re-do. It may still work if I can buy for the right price. Is it worth it? Does anyone have advice on how to shorten the repair process or better estimate costs?
As a newbie, if you're a newbie, you should become familiar with J.Scott's book on estimating rehab costs.
If this is the first time you're attempting such a project, you might want to consider partnering with someone who has done it before. Sharing such a big project and working alongside a seasoned flipper would be worth its weight in gold.
Finally, if this is truly your first project, 6 months isn't a long time to do a complete rehab of a house that has good bones. Don't believe what they show on TV. You may need to find a great GC as well as other trades (elec, plumbing, roofing, etc). You'll need to obtain empty house insurance, pay local property taxes, if any and get utilities turned on. You may need to pull permits. As we barrel toward winter, you may have weather issues to deal with. There will be plenty of $ flowing out before you'll be collecting rent from a tenant.
In short, the house needs what it needs. If you're not prepared to do whatever it takes, then pass on it and seek out a less involved first project. Something that requires just a bit of polishing. Then graduate to a bigger, more complex projects such as the one you describe. With each project, you gain knowledge that will help you with the next.
@Daniel R Jenkins run comps on the area to get comparable ARVs. Then Tim’s that by .7 (70%) and if your purchase price + rehab costs are more than that, probably not worth it.
The idea is when u do this, u will want to rent it out then refinance. The refinance part will only be 70-80% ARV so u don't want to overspend.
Thanks Andrew. The local comps are difficult to find. The property values in the area run the gamut from 500K to sub 100K. I do plan on renting the property but don’t want to spend 6 months repairing before I can get a renter in there.
@Daniel R Jenkins for sure. ARV comps shouldn't be that hard. Just put in your filters to houses sold that look like they don't need any work ie rent ready like u say. Then take 70% of that.
You say 100-500k so 70% is $70-350k.
The rehab costs will vary obviously so I would sync up with a contractor to do estimates for you. Maybe you can get a $50k house and do less than $20k in rehab and rent out for $800-1000. Just an example
As a newbie, if you're a newbie, you should become familiar with J.Scott's book on estimating rehab costs.
If this is the first time you're attempting such a project, you might want to consider partnering with someone who has done it before. Sharing such a big project and working alongside a seasoned flipper would be worth its weight in gold.
Finally, if this is truly your first project, 6 months isn't a long time to do a complete rehab of a house that has good bones. Don't believe what they show on TV. You may need to find a great GC as well as other trades (elec, plumbing, roofing, etc). You'll need to obtain empty house insurance, pay local property taxes, if any and get utilities turned on. You may need to pull permits. As we barrel toward winter, you may have weather issues to deal with. There will be plenty of $ flowing out before you'll be collecting rent from a tenant.
In short, the house needs what it needs. If you're not prepared to do whatever it takes, then pass on it and seek out a less involved first project. Something that requires just a bit of polishing. Then graduate to a bigger, more complex projects such as the one you describe. With each project, you gain knowledge that will help you with the next.