Scaring my hard money lender
I found a deal that I wanted to run by everyone here. A deal so scary my hard money lender needs to think twice about financing me. This wouldn't be the first time. Last time I scared the hell out of him with a mold property. So much so he almost backed out at the last minute until I educated him with legal precedents, health codes and state law.
So here's the deal; a 4bdrm SFH built in 2004 in nice neighborhood. Its a foreclosure and the previous owner vandalized the place. Besides the typical stuff, everything has been stripped including the kitchen sink. The electrical main has been severed. But the real kicker is they took off all the toilets and poured cement down the sewer lines and the shower & bath drain lines. This is what scares him.
I initially passed it over when I first saw it but I could not get it out my head and kept mulling it over for a few days until I got the courage up about doing some due diligence and putting together an offer. I typically run towards rehabs that most investors run away from (like my last mold remediation job). Am I crazy or do I see dollars where everyone else sees headaches. Would you do this deal for 100%+ ROI?
Most Popular Reply
As others have said, it's all about the numbers. Get plumbing bids from some good plumbers, factor the extra cost of replacing the drain lines where necessary, and come up with a purchase price that allows you to make your desired profit based on the rehab costs.
To a good rehabber, there is really no difference between painting a wall and doing foundation work -- you just need to factor in the extra cost, the extra time and the extra risk...