BRRRR Tax Lien Deal Analysis Feedback Wanted

[Peter Rowell]

Hi Everyone!

My wife and I are closing in on a year of our house hack in Albany, and are looking to expand across the river with a BRRRR tax lien deal in Troy. I've been running some numbers and lining up financing through personal lines of credit and 0% credit cards, but would love to get some feedback on potential rehab costs as this is not my area of expertise.

The property is a 3 unit which I am bidding on through the city of Troy's tax lien foreclosure program. The scariest part and biggest unknown is that I cannot see the property beforehand and because of this, I am factoring in all possible costs for the rehab. The numbers include hiring out any plumbing, electrical, roofing, or window repairs and doing the remainder of work myself. 

The quick and dirty stats are as follows:

Overall Numbers

Bid Price - $25,000

Estimated ARV - $160,000

70% of ARV - $112,000

Rehab Costs - $99,900

Total Investment - $124,900

Obviously, the numbers indicate I would be leaving some of my money in the deal, but this is worst case scenario. 

Rehab Costs

My biggest concern is being way off on the estimates. I know the odds of getting an estimate right on are slim (especially for someone like me with limited rehab experience) but I would appreciate anyone who could give an opinion on the below estimates and see if they are in the ballpark.

For context, the building is a 3 story 3 unit built in 1894 and approximately 4300 SQFT.

Area	Rate	Unit	Number of Units	Total Estimate
Overall	0
Heating	$6,000	Per System	3	$18,000
Plumbing	$10,000	1	$10,000
Electrical	$10,000	1	$10,000
Drywall	$1.00	Wall SQFT	4000	$4,000.00
Demo	$1	SQFT	4000	$4,000
Paint	$0.30	Wall SQFT	8000	$2,400.00
Roof	$6	SQFT	1500	$9,000
Floor	$3	SQFT	3500	$8,750
Hot water	$1,000	Per System	3	$3,000
Windows	$300	Per Window	20	$6,000
Kitchen
Stove	$500	Each	3	$1,500
Dishwasher	$500	Each	3	$1,500
Fridge	$800	Each	3	$2,400
Sink	$200	Each	3	$600
Countertop	$1,000	Each	3	$3,000
Cabinets	$2,000	Each Kitchen	3	$6,000
Tile Floor	$500	Each Kitchen	3	$1,500
Bathroom
Toilets	$200	Each	3	$600
Vanity	$250	Each	3	$750
Tub	$300	Each	3	$900
Shower Tile	$500	Each	3	$1,500
Floor Tile	$500	Each	3	$1,500
Other
Washer/Dryer	$1,000	Combo	3	$3,000
Total Rehab	$99,900.00

Any advice would be greatly appreciated! I would much rather have my plan ripped to shreds now that 5 months from now while I am in the middle of a rehab. 

[Ned Carey]

@Peter Rowell first and most important, do you know what the rules are of "the city of Troy's tax lien foreclosure program"?  If you are buying a tax lien, you have to foreclose before own the property. If the city of troy has already foreclosed on the property for back taxes, you need to understand whether you get clear title,

Since it is an 1894 building, you have a risk of greatly outdated systems. You also have a risk of an outdated layout. You have included nothing for framing. 

You are estimating 4000 sq ft of drywall for a 4300 sq ft building. Remember the Sq footage of the building is the floor space, not the wall space. Walls and ceilings will total min. 2 or more like 3-4 time the sq footage of the floors. 

You have also included nothing for demolition. In my area that could be $5,000

When I am evaluating a property i am going to bid on in tax sale. I asses the outside condition and then figure - What is the most probable worst case scenario?  What I  mean by that is the worst case scenario for a house build 5 years ago is likely much different than the worst cast scenario of a dilapidated house built in the 1890s

Windows are generally the first thing that gets replaced when someone wants to update their house. So if a property looks weak and has old wood windows with chipping paint. I know the entire house is a full gut job. If it has new vinyl windows, new front door and other wise looks sound on the outside I assume it needs a full cosmetic upgrade and updating the systems as necessary. If it looks like it was fully rehabbed in the last 10 years I assume it needs a full cosmetic upgrade. 

The above are generalizations and don't work all the time but I buy enough volume that it averages out pretty well. This is for Baltimore even a nice house has likely had its copper plumbing stolen. You need to adjust your assumptions based on your area.

Oops Correction: I now see where you did include demo costs.