Episode 15 of Real Estate Deal Talk finds us on-site in Roswell—about a 20-minute drive northeast of Atlanta—at a property we are considering rehabbing. The neighborhood is really nice, judging by the other surrounding homes. We just met the lady next door. She has two really nice dogs.
The area and neighborhood seem really stable and very quiet, which I like. Also, the overall curb appeal is good, with everybody’s yards just really, really nicely manicured.
The house we are considering purchasing and rehabbing was built in 1980. It’s a three-bedroom, two-bath home with about 1900 to 2000 square feet.
We still have to meet the owner before we can go inside to evaluate the interior condition, but we’ve been able to get a sneak peek through a couple of windows. The two bathrooms definitely need to be updated. In the kitchen, we’d probably also update with stainless-steel appliances, and we’d install hardwood throughout.
Outside, we can see the roof is new, and the roofline looks good. The gutters look OK, and after a power-wash we’ll check them again for consistency.
You can tell from looking at the video that we will need to do landscaping work. Also, we have some structural issues in the back. So between landscaping and fixing those foundation issues, we are looking at $12,000 in total added costs. It’s very difficult to estimate rehab costs inside before we can take a closer look.
The after-repair values in this particular area are around $260,000. So if we can do something nicer to the home, then we will probably sell it for a little bit of a premium at $275,000.
Our basic formula is 65 percent of ARV minus any construction or rehab costs. So 65 percent of $260,000 is right around $168,000-$169,000. Let’s say we have to subtract $40,000 from that, so we will probably be offering $120,000. If the owner is amenable to an offer of $120,000 to $130,000 then we will be OK, but that is contingent upon making sure that we are pinpoint accurate on our budget for what needs to be done on the outside and the inside. Hopefully, it will be a good day.
You can view Episode 15 here:
http://www.realestatedealtalk.com/realestatedealtalk-episode-15-wdyt-good-or-bad-rehab-deal/
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