Originally posted by @Lee L.:
@Mario
How do you arrive at ARV? Projected rents? Comps? What are the current rents? Are you spending the $30K on fixing up the unit to rent so you can rent it for $1350? Or on deferred maintenance, or a bit of both?
It sounds like you are projecting that $30K in repairs will basically double the value of the home from $65K -> $125K. I'm a little worried you might be underestimating the repair bill especially if it's a really old home, and it's a hoarder house. You can spend $30K on one unit, easy.
Hi Lee Liu-
Thanks for your feedback. The rents in that area generally go for : 650-800 one bed one bath; 900-1200 three bed one bath. I have used extremely conservative numbers that are "pre-rehab" units. Once the 30k is spent, the combined revenue from both units will be between 1800-1950.
The home was originally listed at 85, dropped on Monday to 75. Duplexes go for around 135- 150 ( not always renovated) in this area and comps are a bit higher than my figures. The ARV is a bit conservative. But I compared it with what the comps in the area sold for.
You're right- the cost of cleaning out a hoarder house can be steep! Fortunately, I know a few contractors who work at a fair rate. I will be participating hands-on in that work and the rehab as well.
