Our first deal! What now?

[Daniel Torres]

Good Afternoon, 

We might have found a deal, but we are debating whether the Rehab might be too much. We went to go see a house that is below market value however, the house needs quite some work. 

Within our market the single family home has been evaluated at around 189k at 1554 living Sq with a 4 bed 2 baths and sits on half an acre. The home has potential to bring in a monthly rental of $1800 - $2000. The home sits at the front of the land, so there is potential to add an ADU later in the future.

When we saw the inside, it was a nightmare. House was never maintained or serviced and has holes all around the house as if they had punched the walls through out the years. All the doors and windows need to be replaced. Thankfully the floor is in great condition. We did notice some water damage in the front of the house but was told the roof is in good condition. We would also need to gut out the kitchen and both baths and have them completely redone. Total Rehab would be about 40k.

Due to the extensive work needed to be done, our first investor who is a family member is not willing to go through with it. We still need to send the business plan to one of the private lenders who we have been talking to and who has been giving us pointers helping us along the way as we are new Real Estate Investors. 

The home owner has listed the house at 140k, as they do owe 2 years worth of taxes and are eager to sell. Due to the extensive work needing to be done the seller is willing to negotiate the price from 110k - 125k once we have properly explained the work that needs to go into it. 

I’m confident this is a great deal but would like to get some pointers/tips from seasoned investors. I’m happy to provide additional information if required. Also it would be amazing for any investors that would like to partner up with us on our first deal as well as any private lenders would give us additional information or pointers as well. 

Thank you in advance!