All Forum Posts by: Thomas McGee

Welcome Danny. Lots of good info here. This seems like a place to start for you https://www.biggerpockets.com/renewsblog/2014/10/2...

 That's kinda what I think is happening here. But only time will tell here in the next few weeks. My bid price for this property was $100k range and would have gone up to maybe $115k. Not quite double the closing price but close enough that equity room is near zero. 

 Thanks for the reply David. I'm familiar with the concept of trend / herd mentality. I would think that after the housing bubble and crash that home buyers would be more aware of the market they are entering and investors even more so. But memories are short.

@Larry Turowski I'm not certain that the home was purchased by a flipper. I will keep tabs on this property to find out though to complete my educational research. I'm guessing right now due to the timing of the listing / acceptance / closing that it was purchased by some type of investor, whether that be a flipper, wholesaler, investor or live in rehab. This home was listed and closed within 3 weeks and for only $5k under asking price. That leaves the buyer with $36k in equity for reasonable ARV. Unless they are doing shabby work to ready the house for resale with superficial cosmetic work, I can't see it being profitable. Just in simple cosmetics (carpet, bath floor, paint inside, HVAC, demo of illegal construction + repair) my low estimate would be in the $15k range plus the closing costs of the resale, leaving a very minimal profit. This is not a new area either. This home was built in '74. Younger families are moving in though, as it's close to everything with decent schools for NV.

I'm trying to wrap my brain around this recent deal that went down in my area. I was thinking maybe this should be in the Investor Psychology forum but decided here since it was a flip/rehab property.

Property specifics: Asking $171k - 2006 sqft corner lot 8,700 sqft - 4 Bd 2 Bth - 1 Family - 1 dining - 1 living - 2 Fireplace - 2 car gar 

Market: Las Vegas

Average selling price in this area for a move in ready home is 200k or $100 sqft and climbing, some homes selling at $120 sqft. Prices here are so ridiculous they are getting back to bubble prices again in a hurry. 

Anyways, as a newbie home rehabber I walked this house and gave it an evaluation of roughly $50k-$70k in repairs to make this house closer to the $120 sqft side of the ARV. Other relevant aspects that need mention for repair evaluation - HVAC unit is inoperable (not listed in the listing, but known from previous owner), there are areas of permanent construction that need to be torn down due to no permits, carpet replacement, total bathroom overhaul, complete kitchen remodel, yard maintenance, inside / outside paint, stucco repair, electrical repair and other interior cosmetics and so forth. But those are the major ones. Basically you'd have to rebuild this house from the studs up to make it right.

What I want to know is, am I off? Is this house still profitable from an investing stand point at the price that was paid? This house sold for $166k

A quick recap: Asking $171 - Sold for $166k - Needs minimum $50k in repair IMO - Maximum ARV is $220K

Frankly I don't see how it's possible to make this house right with less than $50k in repair. Maybe it's possible to do $30k in repair and make it livable ready but not move in ready. But even at $30k in repair plus holding time of 90 days, making the ARV about $200k, I can't envision this being a good buy for an investor / rehabbing type endeavor.

Just looking for some outside input, that I'm not the crazy one. LOL

Here are some images to help with your conclusions.

This is an extension

of what is supposed to be an open entry way to the front door. They enclosed it without permits. You can the stucco of the original outside of the house on the bottom left.

This is the enclosed room to the front door. This is looking toward the street outside.

Master Bath

Outdated tub

Outdated cabinetry / sink combo.

Master Bdr - Fire place is nice but needs remodel, wall unit ac is yuck IMO.

Outdated kitchen

Lots of loose electrical like this, just hanging out randomly in several areas.

There's many more pics, but just with these I'm sure you get a good idea of the extent of the scope of work needed to be done to not only repair the home, but to bring it into the 21st century.

Your thoughts?

I think the word you're looking for here is Atrocious. That's not bad, that's awful. Looks like a lot of great feedback already, especially from Wendall. I'm a newbie but one thing I've learned quickly is pay behind, pay behind, pay behind. Check their work before you cut checks.

Easily a job that needs to be redone. There's no saving that work. You may be able to save some materials but doubtful. 

Seems like a painful lesson. Good luck. Thanks for the post and all the replies. Good advice here.

Thanks for the welcome Larri, Tim, Charlie and also the links Linval and Mark. I'm sure there will be a slight learning curve on how to best use the tools available on the site.

Hi All,

Newbie from Nevada. Not new to Real Estate, but I have been an absentee observer for the past 10 yrs. Looking to find some properties to flip, wholesale, hold and then some. Will travel anywhere for the right deal!

Had a rental portfolio in the past. Gutted and rebuilt my first home from the studs up. Learned many trade skills along the way and know what I'm looking for when evaluating a property. Seeking equal opportunity investors who are looking to make a profit without lifting a finger! Let's make some cash flow! :-)

Thanks for sharing. Sucks losing a deal over a few thousand. But the lesson for all is invaluable.