Tacoma WA Wholesaler Needs Advice From Local Investors

[Tim West]

BP Team,

I need some local knowledge advice, as I have a couple of properties I am ready to put under contract, but wanted to be sure my numbers look good to ensure I am able to do right by the seller and the cash buyer for these off market properties. Here are the numbers (my assignment fees have been included in the sell price already):

Property #1

4 bedroom/1 bath (2 beds upstairs, 2 bed and 1 bath main floor) 1,280 sqft

$125,000     Sell price to the Cash Buyer

$  20,000     Rehab estimated costs (this would be for full rehab)

$180,000     After Repair Value (based upon comps obtained via my RE Agent within 1/2 mi)

Buyer would of course be expected to pay all closing costs, but this is a vacant property, and the inside just needs some love. The roof appears in decent shape, it is on a nice sized piece of property with fenced front and back yard and detached garage with alleyway access in back. The outside definitely needs painted, and maybe some minor landscaping.

Property #2

3 bedroom/1 bath w/finished basement (There is a 4th bedroom in basement) 1,176 sqft

$147,000     Sell price to the Cash Buyer

$  20,000     Rehab estimated costs (this would be for full rehab)

$215,000     After Repair Value (based upon comps obtained via my RE Agent within 1/2 mi)

Again, Buyer would pay all closing costs, and this particular property has a renter no longer paying their rent (been over a year since they have paid). The roof appears to be in decent shape, and is on a good sized piece of property with fenced backyard, but no garage. I have not been able to get a solid look at the inside due to the renters, but based upon the outside I would say it will need full rehab.

Based upon these numbers, I would welcome feedback on these to see if this matches up with the types of numbers the market is looking for right now. I don't want to put them under contract if these numbers don't work. I used between $16-17 per sq ft rehab cost to calculate rehab estimates. Thanks in advance for your help!

[Mindy Jensen]

Property #1 leaves $35k to sell and take profits out. I don't think that's enough.

Property 2 has better numbers presented here, but if they've got a tenant in there who hasn't paid rent in more than a year, those type people aren't inclined to leave the property in nice condition... I think your rehab costs are going to be significantly higher. What happens if the tenant flushes cement mix down the toilet when they get evicted?

Also, what constitutes a "full rehab"? You can't do a kitchen, bathroom, all new paint and flooring for $20k. 

Have you ever estimated rehab costs before? We could just be thinking of two different things, but I don't think your numbers are going to be correct.