BRRRR Dallas Tx [Calc review] Red light or Green light?

[Dave Brumbaugh]

Hello All, Needing help identifying possible deal here; 2/1 property in South Dallas in GREAT distress. I have a budget of ~150k total for this venture and I estimate about 55k in rehab costs excluding any work done myself. Its in a pretty rough part of the city, however based on the nearest 2 comps, ARV is listed at 192000 after reno. What would the recommendation be for this property? This would be my very first investment to try and BRRRR. Report below; please let me know where I can improve in my report, I am new to the BiggerPockets forum.

Thanks! - David B.

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Jake Wiley]

David - Welcome to the forum!    

Here are a few questions I'd ask.

1) Are houses in the area really selling or are they sitting?    

2) Who are they selling to, investors or homeowners?  Look at the sales info on Realtor or Redfin and call both the buyer's and seller's agents and ask questions to ascertain the market.    2 Comps are not a lot to go off of, especially in a pretty active market.

3) What are homes like this renting for?   This is really important if you are likely selling to an investor.  

4) How many other houses are available on the market?

Here's the lesson I've learned the hard way.   Sometimes you have a budget that tends to drive you into lower/rougher areas.    You may deal with theft, vandalization, harassment, squatters, etc along the hold period.     Demographics generally tend to be renters rather than buyers, which means your offtaker is likely an investor who will drive a hard bargain.   The number of potential buyers is very small, thus not giving you much leverage and you may eventually just be glad to be rid of it.     

If you find that it's a good blue-collar area with home buyers and opportunity, jump on it.    If you find that it is an investor play, I'd be really certain of your numbers, including rents etc.   

In summary, don't let the fact that you can make it work based on the numbers drive you into a less than ideal situation.    

Good luck!