How BIG is to BIG for your 1st Rehab?

[Tony Wooldridge]

Hello once again BP Nation.  I find myself in a position once again to reach out to my MENTOR (BP nation) in the hopes of finding some clarity to guide me in the right direction.  I have been contacted by a motivated seller via my DMM campaign.  He is an out of state absentee owner that is renting out his property to one individual who is subleasing it to a whole a bunch of other people.  Needless to say, it is a bad tenant turned worse situation that has stimulated his motivation.  

About the house.  It is a two story 4/2, 2,124 sqft house.  It is in really really rough shape (it is a complete gut exterior/interior).  It is an older home (1915) which is not uncommon in my farming community neighborhoods.  He has owned it for about 13 years owes 14,000 on it is a little late in back taxes and says he wants $115,000 for the property.  Before physically looking at it I assumed his price was a little high but maybe it looked better on the inside than the out (boy was I wrong). Oh ya, I forgot to mention a RE agent had come to look at it prior to us showing up and confirmed in its current condition a bank will not fiance the property.

So here is the deal, this will be my first project if of course he accepts my offer. I plan on offering him $40,000 based off of the condition of the home and what it will take (my preliminary rehab projections $70,000ish) to bring it back to life. I project that the ARV is conservatively $175,000 tt is an extremely extensive rehab as I stated earlier I have to touch (demo) just about everything on and in the house. So the question is how big is to big for your first project? Would you tackle this kind of project on your first deal? Thanks ahead of time for the insight and as always BP nation I sincerely appreciate your help!