Please give me your thoughts on this one.

[Gary Heft]

Here's a potential property I looked at over the weekend and would like to know your thoughts.

Single Family home
1200 Sq ft
Purchase price $57,000
Rehab: $2-3k
Previously sold in 1995 @ 94k
Comparable rentals in the area range from 775-900/ mo
Comparable sales range from 87 to 125k

My thought is with some interior cosmetic work, lot clean up and mainly exterior work needed, it should sell quick for somewhere in the 85-100k. It's a mile or two from my house so I'd be doing the majority of the work

Would you guys want to buy and hold or look to flip?

Any insight on the numbers would be great.

Thanks,
Gary

[J Scott]

Assuming your numbers are correct, if you put in $2-3K worth of rehab, you get out at least $25K in equity. Subtract your holding costs and fixed fees (commissions, closing costs, etc), and I imagine you still have at least $15K in equity on a $60K property.

Assuming you can sell it quickly and assuming you don't employ any leverage, that's a 25% return in short period of time.

Not bad, especially for a very easy project.

As a rental, it really depends where on that $775-900 per month spectrum you're on. If it's closer to $775/month, it's probably not a great deal. If it's closer to $900/month, it probably a decent deal (about $100 per month cash flow with 10% down and an outside PM).

Verify all your numbers -- especially that rehab cost. I've yet to find a house (especially an REO) that can be put into retail shape for just $2-3K.

It will cost you at least that just to paint the interior and the exterior...