East Valley Rehab

[Justin Owens]

A home pops up today. Wife spotted it first runs comps and it looks pretty good as a BRRR or flip. I call the contractor and we meet onsite. It's in the downtown area which is pretty hot right now. A woman and her contractor came through while we were there.

The place is an absolute dump! My contractor estimated 5 containers of trash would need to be hauled off. The main house is a 2/1 about 1100 square feet built in 1930. Pretty bad shape but after checking the basement and attic the framing seems fine. Needs new wiring and plumbing. Also needs an HVAC system. 

There is also a detached garage or casita that had its own meter. The 2nd unit needs to be torn down. Just terrible condition, leaning walls, trash etc. Hoarders lived in both units and the tenants were evicted a few weeks back and utilities shut off.

My contractor, after discussing an ARV of between $150k and $180k (very optimistic) suggested an offer of $60k as-is or $70k with the debris removed. I agreed with the numbers. List price is $90k.

I called the agent, nice gal. We discussed the property and she forwared bids for the clean up at about 9k for all the debris removal. My contractor had estimated $10k-but my contractor wouldn't charge me if it took longer than he anticipated. I trust this guy with my life. She said she already had 2 offers. I tell her what my contractor had said of $60k or $70k and she said that was lower than the two she already had.

With the amount of work needing to be done, I decided to pass rather than get into a bidding war. With the age and work needing to be done any number of things could pop up. 

As hot as the market is right now, I am guessing MLS is not the place to get these properties. I either need to look out of the PHX metro area including out of state, or try and get off market properties.

Ah the search continues. . .

[Shiloh Lundahl]

Justin,

I don't think you are conservative on your numbers.  I look at about 50 properties a day and make one or two offers a day and I pick up one or two properties a month.  I get "deals" sent to me from wholesalers.  Most aren't what I would call deals, but maybe they are for someone else.  I also look at Realtor.com and Zillow.com which just so happens to be where I found my best deals in 2016.  What I learned from my mistakes in 2015 and 2016 is to do it right by the numbers.  If it doesn't pencil out from the beginning I don't try to push it anymore.  I am in it for the long hall which will be short lived if I don't buy right according to my numbers.

What are your real estate plans for 2017.  Let me know here or in a PM.  I am also from Gilbert and we might be able to do some deals together.