What would you do?

[Gary Shaw]

Hey guys,

I have a lead on a 3 bedroom, 1 bath single family house in a nice suburban area. ARV is about $135,000 (conservatively). The house was built in the 50's. The biggest problem is a previous owner added an addition that expands the kitchen and the master bedroom without a foundation and it's now separating from the rest of the house!!

The current owner bought the house without an inspection (the seller's agent told her she didn't need one).  She now just wants out because she no longer lives in the house and doesn't want to continue paying taxes and utilities on the place.

The property is now free and clear and market values are pretty good in this area, but I wonder if that's enough to make this a worthwhile deal.

Advice please!

Thanks,

Gary

[Bill Jacobsen]

Every flip has problems or you would not have the opportunity to make a profit. You have to determine what it will take to make the property worth the ARV. Sometimes, all you have to do is paint the interior. If that is all you have to do their will not be a lot of profit. If there is more work or more unknowns then there should be more profit.

First, I would talk with the seller to make sure they understand that the price you may offer will be low.  If they do not accept that then don't waste your time on it.

Next, I would want to know what the alternatives are. That will take a contractor and probably government code people. You have to cost out the alternatives and understand that each alternative may change the ARV.

You then determine whether it is worth it.

I am currently dealing with two properties with two different problems.  One property has no water source.  The other property is in city limits but is only accessible by a county road.  City is currently saying I can't build.

If you are buying, fixing and selling properties you are a problem solver.  You are creating value.

Good Luck.

Bill