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Updated over 1 year ago,
Fixer Upper Duplex Underwriting
I am in the inspection stage of buying 3 bed 1 bath/3 bed 2 bath duplex for 575k and know that I do not want to spend more than 650k on this project. I am preparing to counteroffer at a lower price due to the extensive construction needed on this property. Currently, my numbers show that I will need to put 125k into construction to make this property renter ready. However, this 125k includes the cost of adding another bathroom on the 3 bed 1 bath unit (25k). If I am confident that I can either break even or have minimal cash flow by renting the duplex at the current layout (3 bed 1 bath/3 bed 2 bath), should I include the value add bathroom in my construction costs? Meaning, if the value add, would cost 25k, my new construction would total $100k, and I could offer 550k on the property. Or should I still include the value add costs of 25k and not offer more than 525k.