Investor · Austin, TX · Member since 2018 · 192 posts · 104 votes
6y
@Steven N. I agree with @Bryan Noth it is hard for us to give any advice without a little more detail. Did you already purchase this property? What area is it located in? Buy and hold or flip? How did you verify the comps?
thanks guys. I have it under contract to close in 4 weeks. It has a pool and I would like some cash so Im leaning towards flip not rental. Its in central florida and is at median price for the area. I realize this isn't much info but I attached a youtube video to show how clean it looked. Idk doesn't seem to make sense to me to rip out everything because its a little outdated when its so clean I feel like I could sell it as-is for a good profit without spending 30k on reno. here's the video again: new acquisition
Nvm, I can see it now. So just looking at the video, it doesn't look like there is much to do to the home. I mean it's obviously dated but that doesn't mean you have to sink 30k into if you don't feel the need. How much are you looking to profit on the deal? Are you comfortable with it sitting on the market? Some additional information would be helpful to get a sense of what you are trying to accomplish.
Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Steven N.Thank you for the additional data. @Derek Harris is spot on about verifying comps, make sure the market data supports the sale price, with or without rehab.
When considering the extent of a rehab or to rehab at all I would suggest analyzing return on investment. You mentioned the purchase price of $131k and an ARV after renovations of $220-230k.
What is the ARV if you cleaned up the property but kept interior condition as is?
What is the estimate for a rehab on the property to achieve the ARV of $220k?
Nvm, I can see it now. So just looking at the video, it doesn't look like there is much to do to the home. I mean it's obviously dated but that doesn't mean you have to sink 30k into if you don't feel the need. How much are you looking to profit on the deal? Are you comfortable with it sitting on the market? Some additional information would be helpful to get a sense of what you are trying to accomplish.
Thanks for checking out the video and validating my point. I bought it for 131. zillow estimate is 215 and all fixed up it could likely get 225. I was thinking to paint the interior, fix the pool and just list it at 199 as I see places in the area selling 20k below their zillow estimate when not updated. Id rather not have it sit on the market so that's a valid point but I don't see the point of spending 30k ripping thing out just to sell it for 225. I guess I just don't have enough experience in flipping (I usually wholesale) and don't know the area well enough to be confident in my cost and ROI analysis.
@Steven N.Thank you for the additional data. @Derek Harris is spot on about verifying comps, make sure the market data supports the sale price, with or without rehab.
When considering the extent of a rehab or to rehab at all I would suggest analyzing return on investment. You mentioned the purchase price of $131k and an ARV after renovations of $220-230k.
What is the ARV if you cleaned up the property but kept interior condition as is?
What is the estimate for a rehab on the property to achieve the ARV of $220k?
Bryan the issue is Im not experienced enough to run a cost and ROI analysis Im confident in. I do see places in the neighborhood selling maybe 15-20k below zillow estimate when not updated. its estimate is 215. Another issue is I don't know HOW much to reno if I do. If I fixed every single thing I'd like to to make it look awesome its a 39k reno, If I do a light reno just redoing kitchen, bath and some other things I could spend 20k. Im all over the place again due to my inexperience.
Realtor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Steven N. personally I am not a fan of Zillow estimates. Sometimes they are decent, but I would have a local real estate agent run comps to get more accurate market data.
The inexperience is a real consideration, weigh that seriously. If you have the ability or the connections to accomplish a rehab your margin looks decent. Let's run a quick example:
Purchase of $131k
Rehab $39k add 10% for the unknown = $43k
Total in $174k + holding costs.
Sale of $220k - $174k = $46k profit.
But if it sold for $180k with only a $5k make ready with paint and clean out:
Total in $136k, with low holding costs.
Sale of $180k - $136k = $44k profit
Maybe less is more here? Again this is purely an example with hypothetical numbers on my end, you have to verify your own local market data for accurate ARV and rehab estimates. Hopefully this helps you see the deal more objectively and provides you with different options to consider for an exit strategy
Thank you so much, Bryan! The reno estimate of 39k included 10% what-ifs but your point stands. I do need to find a good agent but since I would be selling FSBO I don't know how to do so making it clear I had no intention of using them. I think misleading them would be unprofessional. I think the best move is to get that advice from a local professional and if I can justify it just spruce it up a bit and list it. Thanks for you help!
Thank you so much, Bryan! The reno estimate of 39k included 10% what-ifs but your point stands. I do need to find a good agent but since I would be selling FSBO I don't know how to do so making it clear I had no intention of using them. I think misleading them would be unprofessional. I think the best move is to get that advice from a local professional and if I can justify it just spruce it up a bit and list it. Thanks for you help!
Steven, as enticing as it may seem to not use a realtor, it may cost you. A good realtor will get you a lot more for your property and will pay itself. I also agree that Zillow estimates should be taken with a grain of salt. My recommendation is to link up with a realtor in that area and have them pull comps. Look at properties that are similar to yours that have sold recently and match the level of rehab that they have. Don't overdo it.
Flipper/Rehabber · Orange Park, FL · Member since 2014 · 180 posts · 83 votes
6y
@Steven N. If you want a quick as is offer contact open door. They are buying everything up in the area and they give very fair offers. Doesn’t hurt to see what they say.