Green light our first flip!

[Glenn Espinosa]

My girlfriend and I are about to jump in on our first flip and was hoping to get the green light from people here.

We've been searching for rental properties mainly but happened upon a foreclosure that came up for sale just 2 days ago.

It's a 1100 square foot 4/1.5 situated in a mediocre-good neighborhood. The street it is on is good with a lot of renovated and new construction homes.

While looking at it late last night our realtor found out from the listing agent that there is another offer that came in that day, the listing agent hadn't ran it buy the bank yet, however and will be doing so this afternoon. Ideally we want our offer to come in at the same time...

The house is listed at $29,900, appraised at 108k.
We would come in with 17k cash and take out a 15k personal loan or line of credit (we want to offer $31,500 considering there is another offer?)

The house is really not in bad shape from our first look. Thinking about new drywall, new floors, kitchen remodel and other cosmetic work. We'd do some of the labor (demo, we can lay down flooring) and contract the rest. Rough estimate looks at 15-18k renovation tops.

We'd hope to list the house for 100k. Comps in the area:
6/28/10: 128k for a 3/1 903 sq ft renovated home 1 block down

5/27/10: 81k for a 2/1 672 sq ft renovated home 1 block down

7/23/10: 94.8k for a 2/1.5 700 sq ft total renovation 2 blocks down

10/04/10: 96k for a 4/2 1400 sq ft not renovated .2 miles down

7/2/10: 121k for a 3/1 1100 sq ft .1 miles down

Thoughts?

[Aaron McGinnis]

With apologies - maybe you thought all this through already and I'm preaching to the choir. Maybe not and I'll give you a few thinking points!

For doing a large amount of sheetrock (Over, say, 50 boards), I'd expect to pay $13/board hung and finished... plus the cost of the board and mud and tape, so about $20/board by the time all is said and done.

For a job the size you're talking, you need to find a crew that has the tools to do it right... by that I mean a bazooka, drum sanders, stilts, etc. DO NOT hire a chump with a set of knives and a bucket of mud. You will be disappointed.

HOWEVER... Before you jump into replacing all the sheetrock, you need to take a step back and consider that it won't just be sheetrock you're dealing with.

You'll need to pull off ALL the trim... possibly replacing a lot of it when it inevitably breaks in the process. Then you'll have to pay someone to repair it, nail it back into place... caulk and paint.

Also, if the wall board is a different thickness than sheetrock you may run into an issue with the window and door casings needing to be adjusted for the difference in thickness.

Not to mention the time and money spent tearing out all the sheetrock and surgically removing the trim, labeling it, storing it, etc.

Also, a painter is going to charge extra to paint virgin rock. He'll need to prime, then coat twice to make it right. He won't be able to go through the house with a single coat of good paint and let it go at that like he could with already-painted rock.

The sheetrock guy will need to come back after the primer coat and do touchup work...

All of this means that your paint and sheetrock will take 2-3 times longer than it would if you just painted the wall board.

In other words, replacing all the sheetrock in a house is a gift that can keep right on giving... think long, long and hard before you go tearing it out!