First timer and needing some advice

[Chad Clinton]

My wife and I are trying to get into real estate investing and are looking at our first property which is going to be a fix and flip. What I am struggling with is the property is very old 2 story, built in 1911 and would be a complete gut and redo, which is more than we wanted to start out with. It is currently listed for 39,900 and would probably need the same amount in rehab. It has a new roof, siding and windows and would be remodeled as a 3 bed 2 bath. The issue is it is going to need a new hvac and probably new plumbing and wiring. It seems like it could be a good deal but we are struggling to come to a conclusion. Obviously I haven't addressed everything and some input/feedback would be greatly appreciated to help me answer some questions about the property I haven't thought of. I think I could get between 120-140k ARV.

[Steven Goldman]

Hi Chad:  You should be aware that a budget of $37,500.00 for a full gut rehab including all wiring plumbing and systems is completely unrealistic. In my experience as a fix and flip broker and a rehabber, you should take the square footage and multiply by at least $60.00 per square foot in order to estimate the cost of rehab. If it is rental grade you might be able to get away with a little less. If you are using a general contractor more. Any fix and flip broker or lender will review your scope of work or accuracy and cost. Before you enter into an agreement of sale get a mentor and a agent and broker or lender to review your current value, after repair value and cost of repairs.