Hey there,

I'm still a total beginner in REI, and while I don't want to get stuck in analysis paralysis, I'd like to offer a step-by-step analysis of the first property I've looked at. I don't think I'm going to go ahead with it, but I'd value any feedback you may have and mistakes I may have made. Alternatively, if there is an online group of folks doing something similar, I'd really like to join! I would value the opportunity to share thoughts and processes (and actual numbers, not only high-level concepts!)

That being said, here is a zillow link to the property in question.

Off the bat, it is very attractively priced at $89,000 and while not in the absolute best area, Temple, TX on the whole doesn't seem to be an awful area. So, I called the agent up and scheduled a virtual walkthrough. I don't currently live in Texas but am looking to relocate there soon to be closer to family in Austin. 

Before the walkthrough, I tried to learn more about Temple and this house's location in it. To summarize: this house is located in downtown Temple, which has a higher crime rate than surrounding areas, but the crime rate is still lower than the Texas average. Street view reveals mixed results. The houses one street over are wonderful, and it is on a cobble street which is charming, but it's also opposite HUD style houses and near a Jiffy Lube. Not great, but not the worst.

The house itself is a duplex, but it looks like it can be converted into a single family home, too. It is 1440 square feet. This leaves room for multiple exit strategies: BRRRR, house hack, or fix and flip. So far so good.

I did a quick analysis of recent sales of similar sized homes and with similar bedrooms and bathrooms in the area. It is my (inexperienced) opinion that the ARV is about $135,000. From the photos, it looks like it needs new kitchen countertops, new floors, doors, and paint. Perhaps this will cost $30,000. So 70% of ARV - $30,000 means I shouldn't spend more than $64,500 on the house. Hey, I'm not scared to make a lowball offer, and money is made when you buy!

So, the agent starts taking me on a virtual tour. And says some very alarming things like, "there is definitely foundation damage!", "the roof has collapsed in the kitchen", "you have to be prepared to do plumbing, HVAC, etc." 

As this is going on, I'm tallying these costs up and they are obviously a lot more than $30k. While I appreciate the agent's honesty in this regard, he also disagreed with my evaluation and believes that this property has a $200,000 ARV. I found this difficult to believe specifically because he was so confident that this was the ARV (and as I've read on BP, no one can predict the future.) Besides, let's say the ARV IS 135,000, it's not like the agent is going to pay me the difference when it's time to sell!

So, my options at this stage are to offer something ridiculously low, like $20k, and deal with the headaches of foundation repair, roof repair, HVAC, carpet, rentals etc., for a limited payoff. Or to walk. 

To me, it's not worth it and so I think I'm going to walk. 

In summary, while I don't want to get stuck in analysis paralysis, I'd value any input from the seasoned folks here on where I may have made a mistake in my thinking or approach.  Furthermore, if anyone wants to start a group where we practice analysis and share our thought processes, let's give it a go!