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Updated over 3 years ago on . Most recent reply

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Joseph Jordan
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Thoughts on this property?

Joseph Jordan
Posted

Hi all,

I was hoping to get some thoughts/advice on this property. I know those who aren't local might not be familiar with the market in this area, but I was hoping to possibly get some ideas on the possible rehab budget involved in this property? I was guestimating at around $70K - which might not leave much of a profit margin. Also, should it raise any red flags that the house (kitchen, bathrooms) were gutted, but then they stopped and decided to sell? I drove by the property and it doesn't seem too bad on the outside, however the garage looks like it is barely standing and the house to the left looks to be in horrible condition, almost to the point where I would be worried it would distract potential buyers from this house even after being fixed up. Any thoughts welcomed, thanks!!

1140 Garnet St NE, Salem, OR 97301 | MLS #21161037 | Zillow

The main level and upstairs attic bedroom total about 1250 square feet, with the basement being around 700 square feet.

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Bruce Woodruff
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
13,688
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11,763
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Bruce Woodruff
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
Replied

Hard for any of us to say if it's a good deal, since we don't know the area....it is a 1937 house though so beware...

Main things to look for: 

1) Roof 

2) Foundation 

3) Sewer (Cast Iron?) 

4) Electrical - Main Panel size/number of breaker slots/wire size/grounded?/

5) General plumbing & HVAC condition

6) Everything else

A whole house remodel like that might get done for $70k, but that would be tight IMO, even if you owner/builder it. I would say get some bids, but you don't have time for that. How handy are you? Better be fairly handy to be able to take on anything that comes up later.

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Andy Sabisch
  • Investor
  • Wilkes-Barre, PA
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Andy Sabisch
  • Investor
  • Wilkes-Barre, PA
Replied

The pictures do not look bad in terms of required renovation but pictures often do not tell the entire story. Having a flipper get into a project and find themselves underwater is not that uncommon and could represent an opportunity for you. The thing you need to know with certainty is what is he ARV. Without that, the rest is pure speculation. Remember, the Zestimate is an ESTIMATE and not a firm ARV. What are comps in the area and how long do properties stay on the market.

Have you pulled up the Rehab calculator and used it to see what the rehab should cost you?  If you have not gotten inside, you and the rest of us can only speculate on the costs.  Is the electric updated and is it actually there?  Same with plumbing?  Having the major "gut" done with the exception of the bathroom saves you some money and allows you to see what is behind things.  Looks like black mold in a few places so there might be water issues in the house.

Bottom line is you need to get into the house and do a check of the areas that will cost you money.  Pull up the Rehab calculator and take a copy with you.  Take photos of you own and review it when you get home.  Add another 10% to 15% for unexpected issues and see where it puts you in regards to the ARV.  

Buy with numbers not expectations and you will be covered . . . . feel free to post some more details and the results of your walk through so we can help you further . . . good luck!


  • Andy Sabisch
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    Bruce Woodruff
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    Bruce Woodruff
    #1 Contractors Contributor
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    Replied

    Hard for any of us to say if it's a good deal, since we don't know the area....it is a 1937 house though so beware...

    Main things to look for: 

    1) Roof 

    2) Foundation 

    3) Sewer (Cast Iron?) 

    4) Electrical - Main Panel size/number of breaker slots/wire size/grounded?/

    5) General plumbing & HVAC condition

    6) Everything else

    A whole house remodel like that might get done for $70k, but that would be tight IMO, even if you owner/builder it. I would say get some bids, but you don't have time for that. How handy are you? Better be fairly handy to be able to take on anything that comes up later.

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    Joseph Jordan
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    Joseph Jordan
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    Thank you both - solid advice - I had actually scheduled a time to walk through the property with a general contractor to get a bid on the rehab budget. On Monday, I asked when would be a good time for my GC - he said today (Wednesday) at 4, and this afternoon around 2pm my realtor advised me that the seller had just accepted an offer so we wouldn't be able to look at the house. I'm finding out real quick that time is of the essence. The next time the opportunity arises, I'll have to be more specific with my GC that we need to walk the property ASAP.

    In the future, if I find a property myself, is it more cost effective to contact the selling agent myself rather than go through my buyer agent, to avoid paying commission twice? I don't mean to sound cheap, just trying to see how the pros do it so I can save money - I'm not licensed so I know I would definitely need a realtor when selling time comes, but wasn't sure if I'm paying commission twice by using a realtor in the buying process (I'm assuming I would, and at least have to pay the seller's commission?)

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    Sylvia B.
    • Rental Property Investor
    • Douglas County, MO
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    Sylvia B.
    • Rental Property Investor
    • Douglas County, MO
    Replied
    Originally posted by @Joseph Jordan:

    In the future, if I find a property myself, is it more cost effective to contact the selling agent myself rather than go through my buyer agent, to avoid paying commission twice? I don't mean to sound cheap, just trying to see how the pros do it so I can save money - I'm not licensed so I know I would definitely need a realtor when selling time comes, but wasn't sure if I'm paying commission twice by using a realtor in the buying process (I'm assuming I would, and at least have to pay the seller's commission?)

    As a buyer, you don't pay commission, the seller does. When the seller listed the house, he agreed to a certain commission, commonly 6%, though this varies around the country. If the listing agent sells the house he gets the whole commission. If another agent sells the house he and the listing agent split the commission, usually equally. At closing, the commission is subtracted from the money the seller receives. 

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    Joseph Jordan
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    Joseph Jordan
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    Originally posted by @Sylvia B.:
    Originally posted by @Joseph Jordan:

    In the future, if I find a property myself, is it more cost effective to contact the selling agent myself rather than go through my buyer agent, to avoid paying commission twice? I don't mean to sound cheap, just trying to see how the pros do it so I can save money - I'm not licensed so I know I would definitely need a realtor when selling time comes, but wasn't sure if I'm paying commission twice by using a realtor in the buying process (I'm assuming I would, and at least have to pay the seller's commission?)

    As a buyer, you don't pay commission, the seller does. When the seller listed the house, he agreed to a certain commission, commonly 6%, though this varies around the country. If the listing agent sells the house he gets the whole commission. If another agent sells the house he and the listing agent split the commission, usually equally. At closing, the commission is subtracted from the money the seller receives. 

    That makes sense - do you have any opinions on flipping townhouses? Are they more difficult to sell than regular single family homes?

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    Sylvia B.
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    Sylvia B.
    • Rental Property Investor
    • Douglas County, MO
    Replied

    Can't help you there. I don't flip, and I don't buy townhouses.