Hey everyone,
I'm a new member who is just getting into the world of REI and looking for my first deal in the Philadelphia area. First a little about my situation--
My family has a commercial construction business located in West Chester, PA that does work throughout the mainline. We are now looking to invest in some real estate (mainly in the zipcodes of 19125, 19122, 19121, and 19130) with the goal of diversifying our business and eventually doing bigger development projects. I'm spearheading this, but I have financial backing in the form of our construction business. At the same time I am looking for a place to house hack an hopefully cover my mortgage. It may end up that I do some combination of this where I live at the investment project as it is being renovated and oversee everything.
Now the potential deal-
I found a 2000 sq ft, ~80 year old house in need of rehab on the edge of the Fairmount neighborhood near Girard College. It is a single family but zoned for multi and we would probably want to turn it into an owners unit with a 1 bed on the first floor. The initial list price was 425k (well above market value) and was recently dropped to 365k after 90+ days on the market. After doing a construction budget it looks like the house would need 90k of work to be updated and livable and closer to 130k to be fully fitted out. I know this budget is huge esp for a first flip but I'm confident in our ability to run the project given my family's experience as GC's.
My main problem is that the comps in the area range from ~470k to 590k which is far to wide a margin to really run my numbers with any degree of confidence. I believe we could make the house sell for 530-550 given the larger construction budget but again it's hard to be sure. My initial feelings were that it was surely profitable up until 320 or so, but the seller is firm on their price and has been willing to only drop to 350.
My question is this-- am I correct in assuming that these margins too tight for such a big investment? OR should I give it another look and see if I can get her down to 340 or so?
An X factor is that we would consider buying and holding for a few years during which time I could stay in/ airbnb the 1st floor apt. and rent out the 4 bd owner's suite. The rental income would conservatively be 3000-3600/ mo. Would love to hear what you all think.
Thank you!
