Need Help Analyzing a Deal

[Jonathan Ramos]

Hello AIl,

I need help estimating rehab cost and ARV on this property please help. I am new to BP. I think a found a property that can be worth looking at in the Orlando Market. I would also like to partner up if possible with someone on this project as it would be my first.

https://www.biggerpockets.com/calculators/shared/3...

Please help BP,

Jonathan 

[Kaynea Bingham]

Hi Jonathan:

Way to jump in there and try to get that first deal. It really takes a bit of courage to make that first step. Figuring out the ARV can be very tricky. When you get a chance, take a little time to listen to some Podcast on BiggerPockets, they have great information, and can help educate you on the do's and dont's of ARV and flipping.

About your home on Lucile, there are a few tricky things with this property.  

1.  Be careful, there is sort of a bidding war on the property, and you don't need to pay more for it than you can afford. ( If it doesn't make money, it doesn't make sense)

2. The area is sketchy.  It sits outside a great community called MetroWest.  The values in that community are great, but your property sits outside of that community, literally a couple of blocks away.  Although your property and that community share the same zip code, your values are not going to measure up.  Its definitely a case that you have to drive the neighborhood and the streets and see what your getting into.  The people who live in MetroWest are NOT going to live on your street. 

3.  Your values are skewed because 32835 has near million dollar homes, but your home will never get close to that value.

4.  The home has fire damage, evaluating this property will be tricky, as you don't really know how much damage has been done to the property, in addition, the home  was built in 1964.  You need to address the HVAC, the lead based paint, and a list of other older home problems.

5. The other house on the street listed for $175k was sold at the highest part of the market back in 2007 for $185K, the owner will NEVER get $175K as the homes in the area are closer to $80-$100K realistically.  

I know it seems like a great deal, but as you know, you have to evaluate the ARV carefully by comparing apples to apples, and oranges to oranges. One last note, when someone gives you the ARV, be sure to check each comp, look at the sales history on the property, and make sure the comparisons are homes that comparable to what your buying.

I hope that helps.  Feel free to drop me a line if you have any questions.  Also, reach out to John Kent or Stephen Anderson, they have great info and advice on the Orlando market.