Cheap property & a lot of work... Help!

[Alexis Moore]

Hi, I am brand new to real estate investing (have only listened to podcasts/ watch videos/ etc). I found a house for sale in a not-so-great area for $10k. This is because there are several things not up to code and the owner doesn't want to deal with it. What I know is there is an addition that was not finished - needs insulation/doors sealed, subfloor replaced in some areas, new windows, and some mold in the living area that I know of. I am supposed to go look at it tomorrow, but was wondering if I could get initial thoughts. Because I am inexperienced in this area, I am not sure what to estimate for repairs - particularly for the mold remediation. Any advice or help would be great!!  (Also, given where it is located, I would estimate rent to be about $650.)  Thanks!

[Account Closed]

Originally posted by @Alexis Moore:

Hi, I am brand new to real estate investing (have only listened to podcasts/ watch videos/ etc). I found a house for sale in a not-so-great area for $10k. This is because there are several things not up to code and the owner doesn't want to deal with it. What I know is there is an addition that was not finished - needs insulation/doors sealed, subfloor replaced in some areas, new windows, and some mold in the living area that I know of. I am supposed to go look at it tomorrow, but was wondering if I could get initial thoughts. Because I am inexperienced in this area, I am not sure what to estimate for repairs - particularly for the mold remediation. Any advice or help would be great!!  (Also, given where it is located, I would estimate rent to be about $650.)  Thanks!

 First I would try to figure out what it would sell for all fixed up and smelling nice. Then make a work list for each room and a line item for repairs like:

Demo  Cost $ ______ Time - Days ______ 

Electrical Cost $ ______ Time - Days ______

Sheet rock Cost $ ______ Time - Days ______

Paint Cost $ ______ Time - Days ______

Fixtures Cost $ ______ Time - Days ______ 

Window Coverings Cost $ ______ Time - Days ______

and so on etc and there are plenty of places to get a blank list like that

Go around inside and out side, (roof, siding, foundation, septic, fencing, landscaping and so on)

You should have a sheet for each room of the house and at least one sheet for the outside.

Then you add carrying costs, Cost of money, Costs of Pizza for the guys to keep them working, etc, etc, etc

Then you add it up and subtract from what you think it will sell for. 

Then you stop and think, "is there a better way to make the same amount of money faster" such as a "Minor" fixer instead of a rebuild. 

That's what I would do. (Unless it's in a crappy area, then I would just say my favorite motto)

"If Bullitts are Flyin' I ain't Buyin".