aaaaaahhhh!! Should I stay or should I go - Posted by Matt-(OH)

Posted by Tom-Il on February 20, 2002 at 13:43:52:

If you were on top of the costs to rehab, and wanted to spend the time I feel the deal was a money maker.

aaaaaahhhh!! Should I stay or should I go - Posted by Matt-(OH)

Posted by Matt-(OH) on February 20, 2002 at 13:32:55:

I have just withdrew an offer on a 3/1 sfr. I had it secured at 33k and market value in mint condition would be 65-70. I withdrew for two reasons, one I was in a multiple offer situation that i feel the other agent involved was trying to put the deal together with her “in house” agent instead of working with my offer. However she did say that the bank(seller) wanted to know if I would up my earnest money to $500 making me think they were looking at my offer. The second reason is I started looking at the house again and added some repair costs. What does anyone think of the following…is it a deal or no…purchase at 33k, needs furnace, new bathroom,new kitchen (completely), paint,carpet, walls have paneling on lower half needing taken off and replaced with something updated, needs some doors and landscaping. I also feel there is a problem with the soil stack(waste line) in which it needs replaced. I have a guy who will do all the work for about 3500 + materials. I wanted to cash out on 80%ltv and sell on a L/O. What is a reasonable profit on the cash out. I was hoping for no less than 5k and really wanted 8k just on the refi. Am I off balance here? When I told the other agent I wanted to withdraw she was sort of dumbfounded. I think I called her bluff. Please advise someone…tks

Re: aaaaaahhhh!! Should I stay or should I go - Posted by Kent C

Posted by Kent C on February 21, 2002 at 02:34:32:

Waste line $3000, Kitchen $8-15k (call it $12), bath $5k, carpet $2500, linoleum $800, walls interior $1000, paint interior, $1500, paint ext $1500, furnace $2k (CHA)-$8k (northern basement boilers or the like), doors $500, misc unexpected $2000, landscaping $2000, init closing $2000, refi $1000, minimum profit (for this much work) $10000.

Now reverse engineer. $65k finished appr - $34k repairs-10k profit.

Now. Listen to me. Go back and replace your bid. This time at $15,000. When they groan, resubmit your top bid of $20k with an est list of known repairs.

Now walk away and give them 3 days to think on it telling them you have other bids in elsewhere and the first response gets your money.

If it is a great location, you never stood a chance anyway. A home owner may be willing to give full value. We cant compete with homeowners.

Dont be sheepish about your offer. Be matter-of-fact. This sounds just like a place I just did! I offered $15k all cash (half what they wanted) they scoffed and said “with a $500 deposit?” So I put up a $15k earnest deposit to be held by a third party. This was really unneccessary showboating.
We settled on $16k! Cost me $25k in repairs. Appraised at $70k. That is either $10k on a 80% cash out or $20k after expenses upon selling (which is really only $10k net anyway due to taxes).

Good Luck.
Kent C

Re: aaaaaahhhh!! Should I stay or should I go - Posted by JD

Posted by JD on February 20, 2002 at 20:30:52:

I’d have bought it at 33k (assuming your numbers are accurate). i am assuming you mean new cabinets and appliances in kitchen and new fixtures, cabinets, enclosure in bath.

Pass! the repairs will eat up any profit. - Posted by Dee-Texas

Posted by Dee-Texas on February 20, 2002 at 19:12:11:

Re: aaaaaahhhh!! Should I stay or should I go - Posted by Mark (WV)

Posted by Mark (WV) on February 20, 2002 at 18:11:53:

I can’t see a deal here at all, max offer @ 60% ltv with 3500 repair cost alone would be 35500.

I can’t think you could buy the materials for this amount of work for 2500 bucks ! Kitchen alone would wipe that out.

It is hard to give exact numbers without seeing the house or knowing the sizes of rooms involved, but I would hazard a guess at a cost of around 20k including labor the get this one up and running.
Good Luck