House #5: Some Details

January 3, 2009 · 0 comments

As I mentioned before the holiday, we have another house that we’re ready to pick up. The DIY House is (finally!) officially under contract, and we’re hoping to close the middle of this month.

Here are some pictures

The house is a 3/2 split-level with a large eat-in kitchen, separate dining room and large open living room. The bedrooms are large, and the master bath currently has a jacuzzi tub, room for a double vanity and a stand-up shower. The lower level has a partially-finished large room that can easily be converted to a finished space with a drop ceiling, some carpet and some paint. And there is a very large two-car attached garage off the basement. The lot is relatively large (based on our guess of the property line) and relatively flat, though it is mostly populated with trees, so unless we do some landscaping, it’s not very usable. And while there is a large second-story deck off the living room, it needs some serious work.

In terms of numbers, we’re picking this one up for $48K, and I expect the rehab to be somewhere in the area of $25-35K, depending on what we decide to do with it (I’ll post a Scope of Work and final budget when we get closer to closing). It’s likely we’ll spend as much — if not more — on the exterior than the interior of this one. We likely need a new roof, plenty of soffit/fascia work, some siding repair, new exterior paint and a decent amount of landscaping. Though once completed, I think we’ll have some decent curb-appeal for the neighborhood.

Unfortunately, there isn’t much in the subdivision in terms of comps, as most of what is selling in that area is foreclosures. I hate to buy a potential flip without any concrete resale values, but based on some of the non-comp data, I’m not too concerned with this one. The house is appraised at $152K, the two houses directly across the street are listed for $155K and $165K, and we’ll likely be able to make our desired profit if we can sell at a minimum of $110-115K. While I don’t imagine we’ll be nearly as nice as the two listed across the street (we’re likely not going to do a full remodel on this one), our target market will be different, and I think that price for this house will be a great deal for a first-time home-buyer with a family.

Our exit strategy on this one will likely be rehab and resale, though the numbers would could support holding this as a rental or lease-purchase. It’s a large house, and once the market turns (or at least once there are more qualified buyers), I imagine it could easily rise 20-30% in value very quickly. So, we’re not ruling out holding this one if the rent comps support that strategy. We’re planning to do some more research in the next couple weeks, and will figure out our strategy by the time we close.

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