Rehabbing A House That Is In Terrible Condition
Is it worth rehabbing a house that is in terrible condition, or is it better to rehab a house that just needs cosmetic repairs. I saw a house that needs about 45-50K worth of work, but I can make about 30K. The job should take about 4-5 months.
I would say that the house you are describing would be good if you were comparing it to a deal where another house only needed $10 worth of work and you were going to make $50 in profit, with 30 minutes worth of work.
Get it?
Hello, been awhile since we posted.
Hope e'1 is well and happy.
I'm glad somebody mentioned 'challenged homes' .
I got so many of these in my mailbox yesterday, I figured there had to be some use for them.
I won't post the link, but if anyone wants to list a 'less than stunning' home, please click on our profile & see if this would help.
I'd like to post a couple there for the joy of it.
Something novel.......
the Mrs
My first thought would be "how much do I want to make per month?" If this is going to take 4-5 months for $30,000, I'd rather keep my time and funds available for another deal that can be done faster for less single profit but more on a per month basis. This is the same logic as what The-Rehabinator was saying.
If you could find 2 good deals where you only make $20K each, but can do both in 4-5 months, you'd be ahead. I realize you also have to consider how many rehabs you've been finding.
Exactly Glenn, the deal presented here can only be judge good or bad if it is in comparision to an alternative one.
You can compare apples to apples, some people even want to compare apples to oranges, but there is no way to just compare apples to ... nothing.
if you have cheap labor and are using someone else's money to finance it, then go for it. why pass it up?!
if it's your money, then how often are you finding deals? it may still be worth doing, i don't consider it a bad deal, but i have to wonder what the hell it needs that would take 45k to fix. you could get a pre-fab built for that much in the right area.
You should very carefully run the numbers. As we all know, projects often cost more than we originally estimate. Maybe you can actually get away with less work=less time=more profit. Holding costs are the killer from my experience.
I would do the deal! This will probably be a good learning experience. Shorten your rehab goal to 3-4 months to turn. I am sensing fear in your post.
It may be an excellent deal, I have no idea from the limited information. However, that $45k number makes me wonder what the neighborhood is like. Houses in the best areas for rehabs generally don't get that severely degraded. Again, I no nothing about what is wrong with this house, what the neighborhood is like, what comps are, how fast houses sell in this area, etc. etc.