Deal Advice/Analysis - 1 House, Splitting Lot, Use as Leverage?

[Kyle Cabral]

Hi All,

I have an interesting scenario with a seller that just contacted me today.  In the beginning of my marketing campaign and getting out there, I would drive for dollars, get listings, find phone numbers using zabasearch and cold call people and leave messages.  Well one just called back today saying she had a house she was looking to sell. 

Here is the scenario

The house in question needs to be completely renovated as it was a house she grew up in, her father was 97 years old and recently passed away but never got to fixing anything.  I asked her about major things, electricity, septic, etc.  She said it would be a complete renovation and everything needed to be fixed.  She also mentioned that she had the town take a look at the land to see if they could be split into two separate lots, which it can be and was recently approved to do so.  I asked if she was looking to sell separately or as one and she said she had no idea, didn't care.  This is where I was thinking of opportunity and leverage with the lots in mind.  

What do you guys think of this strategy?

I was going to offer $75,000 - $80,000 for the lot as it sits explaining that the house is worth the land that it sits on, minus the demolition and cost to get rid of everything/clean it up.--barring the fact that I don't think I'd be able to renovate as is.  Given that, using the leverage of the other lot by mentioning that she could keep the other lot as is and sell separately, that way she gets more for her dollars as opposed to selling all together with the house as is, because in the area and given the circumstances, it wouldn't be as financially beneficial.

Guesstimate on numbers, as I am seeing the house Saturday

Purchase Price: $75,000 - $80,000
Rehab: $100,000
ARV: $285,000
Time to Complete: 10 Months
Time to Sell: 2 Months
%ARV: 74
Projected Profit: Around 55k

These are very loose ballpark estimates.  But do you think this is a good strategy or would you pitch it some other way or do something else with the land.  It's two 2.135 acre plots of land in an OK area, nothing special. 

Thanks for the insight.

@Joshua Dorkin P.S. If I CTRL+B something or bold a world, then space and CTRL+B again to unbold or go to the menu, never works, just keeps on bolding : ) Figured I'd submit a small change request.