All good thoughts, thank you. Yeah, I’m pretty sure on the costs, it’s a VERY old house. And that’s 50K, my company’s costs (AKA: No profit for my construction Co when I work on my own projects). The house essentially needs to be gutted. That’s why I want to stay away…too many unknowns. I don’t think I’m being greedy in asking 75K though (I think the realtor is being greedy asking 85K) b/c at 150-160 FMV, there’s still money on the table for a rehabber. Granted, he’s not getting it at a 65% discount, but there’s still $ in the deal for him. I’m in one of the hottest markets in the NE, so there is plenty of activity. After my most recent contract fell through, I already have another cash offer of 75K, but I’ve been there before. I just don’t want to keep tying the prop up for several weeks while they inspect, only to back out. I guess I should just take the $ and run if I can get it, huh? 25K profit is better than none :)!
What would you do? I bought a 100+ year old SF Handyman special in Sept for 45K cash in a decent neighborhood 2 blocks from the ocean. 2 BR, 1 BA, full walk up attic (unfinished), cedar shake.
I was orig. asking 75K and had tremendous interest and 2 contracts that fell through. Then I listed with a realtor in Jan for 85K and I’ve had 2 more contracts that have fallen through.
It seems everyone is getting cold feet after thorough inspections. I am a contractor and I know the house needs at least 50K worth of work, but I’m not really interested in opening that can of worms. FMV is probably 150-160K after renovations.
I can replace the roof and add heat for about 10K (it has no heat, it was a summer cottage) and probably satisfy my mortgage co. so I can get a mort. Should I do that and get my cash out and maybe rent it - or - try to resell again? It seems I’m beyond the point of a quick flip.
Am I being to greedy if I’m looking for a 30K profit? That’s what I think the market will bear, but I still don’t have a contract. What would you do?
Posted by Robert on February 27, 2002 at 23:01:53:
Marke I definitely think you’re asking too much for the property. If it will cost 50k to fix it up, then the most any investor would probably give you on a flip is approximately 54k. I arrive at this figure using your comp of 160k x 65% less repairs. Fifty thousand to fix up the home are you sure? This seems like a bit much to me. You wanting to make 30k without making any repairs or on a quick flip is very aggressive and unrealistic. A rule of thumb to remember is that there is generally no room for both investors to hit a home run. I’d suggest you flip for 3-4 thousand and move on to the next deal.
I would tend to lean towards rehabbing it then selling. There are probably 10:1 buyers looking for liveable spaces that can receive FHA approval. At the very least I would bring it up to FHA standards and sell it at a discount with the “you finish” clause in the contract. That will attract a few of the newbies in RE investment as well and give them an oppotunity to capitalize. Good Luck
Posted by Dennis on February 27, 2002 at 21:22:43:
I don’t know Marke, how much over 50K are you talking for rehab? It seems that even if rehab were 60K, and FMV is 150K, with your 45 already in the property, even if you let people “beat you down” to 145K on negotiations you’re at, what, 40K in your pocket? (And I’m using all lowball figs here)-I don’t know, if I were you I’d rethink the rehab, as long as the interest was there in the finished product…you’d be working toward a sure profit, if you’re accurate in your assessments. Best-Dennis
you’re at, what, 40K in your pocket? (And I’m using all lowball figs here)-I don’t know, if I were you I’d rethink the rehab, as long as the interest was there in the finished product…you’d be working toward a sure profit, if you’re accurate in your assessments. Best-Dennis