bidding a rehab project - Posted by Steve

Posted by jml on February 15, 2002 at 16:32:23:

There is another good book called “Flipping Properties” by Bronchick that has a chart of estimating repairs and labor. Hey, good luck on your project and remember that banks don’t like to own properties. Bid hard and wait it out. _ JML

bidding a rehab project - Posted by Steve

Posted by Steve on February 15, 2002 at 12:37:39:

I saw a house that might be a good rehab investment but I have never done this. Maybe someone could help me sort it out. Property is owned by a bank. The bank is 50 miles out of town. A water pipe broke on the second floor, taking down the kithen ceiling and wrecking the cabinets. (Water bill over $1400). Its a solid built brick house in a good safe nieghborhood. Also there was a roof leak (but roof does not need replaced) that took down a plaster ceiling in an upstairs bedroom. The place needs cleaned painted and carpeted, also. And I’m sure there are many miscellaneous repairs I never even thought of. The front porch rails need replaced, there are wooden singles on the outside walls that need help. All in all this house is pretty rough condition, but I do feel I could do alot of it myself. The bank representative took me through the house today and said if I wanted to have a professional look at it, he would come back to let me in. He said make an offer and if the bank accepts I would pay 1000 down with closing in about 45 days. My questions are these: Is it worth paying 300 now for a prof. inspection when I don’t know yet if this deal even makes sense. I estimate ARV at 55-60. Bank says they has an appraisal of 30. I Think the most I’d pay is 18-20, assuming the repairs are 15 or less. My strategy would be to spend lots of time at the house, hire out the plaster, plumbing, and carpet and do the painting and cleaning myself. I have the time and I have the 18 in the bank. Am I on the right track? What chance do I have of getting the bank to sell cheap enough for me to make it worthwhile. How do I avoid getting taken by a contractor? Should I maybe try to find a contractor and split the profits? Coming up with all the repairs money would be a problem for me. Would a contractor be willing to wait till I sold it for his money? More questions than answers! Thanks for your help. Really appreciate it.

Re: bidding a rehab project - Posted by Woody (MI)

Posted by Woody (MI) on February 16, 2002 at 04:23:10:

I would pull a Kyosaki trick on them and send an offer of 10K cash along with a certified check. This does 2 things: They know you are serious and they have the money in hand. They just might see it your way. Just a thought. Good luck


Re: bidding a rehab project - Posted by Rusty

Posted by Rusty on February 16, 2002 at 24:08:03:

I’d bid real low on this one if it’s as bad as it sounds because the bank probably knows nobody else will bid on it.

I had one like this where the roof leaked in a foreclosed vacant house and the living room ceiling caved in. Just imagine wet insulation and sheetrock hanging down in the the living room and the musty odors. It scared off everybody but me because I knew I’d get a steal on it. The uglier the damage the better as long as the structural parts of the house are okay. The rest of the house was in decent condition except that the yard was an absolute jungle. I spent 2 days clearing brush with a chainsaw and machete. It was unbelievable! This cured me forever from sweat equity, lol. Now I hire out everything I can.

Anyway, it didn’t cost nearly as much to fix as it looked like it would, and I replaced all the carpet and vinyl flooring, and painted. It looks great now, you’d never know it had a problem. I kept it as a rental property and I’ve had the same tenant since I rehabbed it.

The moral to the story is bid low on the house (you can always come up later), take pictures of the worst parts as someone mentioned in another post and send them in with your low bid. I would go ahead and pay for the inspector just to make sure you aren’t getting something even worse than you think such as foundation or structural problems. The former FHA inspector that I use is only $185 and he’s tough on the houses I have him look at. But that’s what I hire him for.

Best of luck!

Re: bidding a rehab project - Posted by lucky

Posted by lucky on February 15, 2002 at 13:14:02:

When I make low offers like this to an out of town bank, I have the bank rep. or agent take pictures of the bad shape that the house is in, then I send the pictures and a statement of the condition of the house with an estimate of fix up cost along with my very low offer.I’ve had pretty good luck with this.
As far as contractors, what state are you in?
Maybe you could get a rehaber to partner with you for part of the profit.I’m a rehaber and I do this all the time.
hope this helps



Re: bidding a rehab project - Posted by Shawn (OR)

Posted by Shawn (OR) on February 15, 2002 at 13:44:55:

I’d recommend you get the book “Buy It, Fix It, Sell It, Profit” by Kevin Myers. I’ve found it to be pretty useful and it only costs about $18 at Barnes and Noble.

Good luck.