After 7 months of looking at deals and feeling like we weren't making much progress, we came across a listing for a 3,000SF SFR on a quarter acre, with a pool and a detached garage, and 'enter at your own risk' as part of the listing description. There had been a fire in the home and it was being listed at $130K. Knowing that this property would get a ton of investor attention we decided to act quickly and aggressively. We made our offer within hours of the listing hitting the market: $150k, a 7 day option period and $200 option fee, and a 14 day close. We heard back within hours that the seller had verbally accepted our offer!

So we called two contractors and gave them some details with a few photos. They both agreed the rehab would likely be double the $75k we had penciled in. We engaged one of them to do our due diligence and walk the property to get a full assessment of the damage. Turns out EVERYTHING needed to be replaced, minus some floor tile that could potentially be salvaged...

48 hours before our option period was up I called our contractor to see where the numbers were at. She informed me we were looking at $150k of rehab at the moment and she wasn't quite finished... So I told her to stop everything. We were so far off it probably would fall through and there wasn't any reason to invest more time into the estimate. We then called our agent and let her know we couldn't afford to pay more than $75k. So she proposed our offer to the selling agent and within 10 minutes heard back with a counter for $80k. We were getting close! I immediately called the contractor back and asked her to finish up the bid. Within an hour we had our numbers. $175k for construction assuming worst case scenario. To the chagrin of our agent, we went back to the table once again and offered $50k, 1/3 of our original offer. Almost immediately we heard back with a counter for $55k. SOLD!!!

We are now the proud owners of The Fire Pit and have demolition scheduled to begin next week. If all goes (somewhat) according to plan we will have a tenant in Feb 1 of 2021.

And if we can get the construction budget down to $150k we will walk away with a brand new home that cash flows $350-$400/month using the 50% rule and we won't have left a dollar in the deal.