I posted a message in one of my favorite REI web sites regarding the rehab, along with a link to the pictures. When got in this morning, I noticed Steve Cook himself responded with an answer that deflated the wind in my sails about the rehab. He basically said the project would take 4-5 months to complete (yippie!), but would probably cost $100,000 (OUCH!). I thought I was being conservative with my $70k estimate, but the extra $30k would definately leave me with little, if any, profit.
Also, on Monday, I called a friend of my in-laws. Having worked in construction, my in-laws have some contacts in the industry. One of them happens to be a GC. I told him about the property, and gave him a link to the pictures as well. We agreed to meet at the property last night, and he pointed out NUMEROUS things wrong with the place that even I hadn't thought of - the scariest was it could very well be contaminated with mold. He saw signs that it was, but would have to get a mold remediation crew in to be sure. Great. He also said if it was a straight fixer-upper with no structural changes, he would roughly estimate $70k in repairs from what he could tell. If it required replumbing, rerunning electric, reframing, etc., in order to make the structural changes, it could easily run over $100k for this property. And that wasn't including mold remediation and releveling. Ugh. So, it looks like this property was a diamond in the rough that turned out to be glass instead. I guess I could still run through my investor list to see if anyone would be interested, but the margin would be awfully slim.
Back to the drawing board. :-/
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2 comments:
Well, at least you found this out before you bought it! Live and learn.. Just for the heck of it, you might want to mention to the seller that you've heard from two independent sources it will take about $100,000 to rehab the place. See if he offes to lwer his price. It's have to be a pretty dramatic lowering, but it's worth a shot. At the very least, you'll put that figure in his head and if he sits on the property for another 2 or 3 months, you might get a phone call later..
Shaun - My words exactly! The good thing is I have had about five GC's call me about it after someone they know forwarded my note I posted on the local REI club web site. So now I have some reputable GC's I can call in the future.
Richard - Thanks! It really pays to understand everything about the property before driving the first nail in.
Bginvestor - So true! I actually thought about that for a whole 5 minutes, but the location and added expenses probably would have floored me. Plus, I found out the land portion is actually worth $21k, so I'd be in the hole $8k from the start.
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