Posted by IB (NJ) on May 16, 2007 at 11:18:22:
Tear it down and rebuild. Just a suggestion.
Ib
A real dump - Should I stay or should I go??? - Posted by tony mcgann
Posted by tony mcgann on May 16, 2007 at 09:29:50:
It’s a real dump. Looks like it was split into some kind of rooming house for slummies. One of the beds looks so delapidated, I think it has fused into the carpet, which in turn is fuesd into the floor. Truly horrible.
The good points. It’s on the main highway in a nice area of a fast growing community. Fast in terms of housing starts, not necessarily businesses. We are on the fringe of a larger city, with a recently developed highhway connecting the two. It even has an ocean view.
Anyway, comps are $70-80K. House is listed at $32K as a dog. It is worse than a dog. Think I might get it for 20-25K. It needs a total gutting. There is no bath tub, so I’ll need to introduce one. There are no kitchen cabinets, but I have my own from a recent reno I did. They’re in good shape and would do the job.
The first thing I need do to the place is order a dumpster and rip eveything out. Tear down the 70’s panelling on the walls. Chuck out the appliances that are included in the deal Yippee! Then probably drywall the entire place, paint, put in some carpets or laminate floors - perhaps tile.
Can someone share a list of items I need to run through for a gutting job. I feel there is potential here, my gut feels have always been right before. Should I stay or go, is the question.
My big fear is understaimating the work need to spruce up an ugly old stinker.
Tony
Dumps R Us - Posted by Jimmy
Posted by Jimmy on May 18, 2007 at 07:13:08:
I routinely buy properties where my rehab budget is 2-3-4-5 times my purchase price. I bought a 3300sf brick 4-plex last year for about $12,000, stripped this nasty dog down to the studs, rafters and joists–and rebuilt it. and I mean everything. rehab cost me 70K. when finished, I had a 4-plex worth 125K and rented up for $1600 a month.
70% refi loan got all of my cash out, plus a little extra.
analyze your opportunity the same way.
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budget out the rehab costs. (include any floorplan changes or additions)
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figure the ARV
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allow for a fat profit margin, to pay yourself, and as protection if you are wrong about 1 or 2. make your offer. understand that you will probably not have much competition, so low-ball them
Re: A real dump - Should I stay or should I go??? - Posted by michaela-CA
Posted by michaela-CA on May 16, 2007 at 12:24:00:
Tony,
as has been suggested, Possibly tearing down and rebuilding or selling it as a building lot might be of interest. Especially, with an Ocean View. Do the comps you pulled have that view as well? It can make a big difference.
Is this a historic house? If so, you could auction of the salvage rights for trim etc.
If the comps are truelly only 70-80K, then getting it for 20K and having to completely gut it, might not leave you any profit. If you gut, you will also have to do new electrical and possibly plumbing. You may find termite damage in the walls. The building inspector may push you to bring certain things up to code, once you expose the studs and rafters, if they aren’t etc. Not enough profit for rehab. But if you check for comps with ocean view and maybe look at new construction with ocean view, that could make it a deal as a lot.
Michaela
Re: A real dump - Should I stay or should I go??? - Posted by Edwin Barker
Posted by Edwin Barker on May 16, 2007 at 11:43:28:
One of the smartest things you can do as an investor is being able to
recognize when a property is too far gone. Some places just are not
worth the time and expense. A few years ago I looked at a small dumpy
house. It was rotting in several places, was extremely dirty and scuzzy,
and even had several holes in the floor where you could see all the way
to the ground. Someone eventually bought it, bulldozed it, and had a
beautiful duplex built. It was so much nicer than if that person had
remodeled the existing house. On the other hand, sometimes things
look worse than they really are, and with some judicious remodeling,
you can make a place liveable for less money than building new. Good
luck!!