Is this worth the risk? (flipping a mini-mansion)

[Melensdad]

I can get it at a good price.

Needs new wood floors. Needs new heating and cooling systems. Copper downspouts were stolen. Exterior doors need to be replaced. Lots of updates needed. Bathrooms are 1990's era. Kitchen is actually fairly modern, lacks all appliances.

1.06 acre lot on the nicest street in the most desirable section of a city that is only marginally desirable.

Over 4000 square feet. 4 bedrooms. 4 bathrooms. Only a 2 car garage.

Might be too much of a project that could get out of hand. In fact I'm sure it could get out of hand pretty easily. But damn its got so much potential. Interior wood staircase is amazing.

[pirate_girl]

Yes!
Oh my, you're so right about the staircase.
Someone loved that place at one time.

[Melensdad]

Trying to add up costs now to see if its worth it.

Believe it or not, the MARKET PRICE for this home AFTER repairs is roughly $380,000 to $400,000

This was on the market in 2009 for $690,000. Its been vacant since 2014 or 2015.

It would cost about $2,500,000 to build this today.

[Doc]

Wow. It sure has potential. You know there are always surprises with any flip, as long as you can see enough in reserve to handle the unexpected go for it. Nice place.

[Catavenger]

What's the real estate market like there? Even if it's in a desirable part of the city will it sell or will you have to sit on it before it does?

[Melensdad]

Originally Posted by Catavenger

What's the real estate market like there? Even if it's in a desirable part of the city will it sell or will you have to sit on it before it does?

In modestly priced homes the market is the hottest city in the region. Houses selling in an average of 11 days. But the city is dominated by working class families buying 3 bed/2 bath 1800sq ft homes and those are the homes that end up with bidding wars as buyers try to acquire them.

Not sure what the market is like for upscale home in this city. And clearly this is an upscale home. Which is why it would be a risk. Literally 1/4 mile south of this home is the nicest upscale town in the area, so move this home 1/4 mile and the house would be in the hottest market for luxury housing. But its not in that city. Not in that school district. So it is a risk.

[jpr62902]

With an expected sale price of only 400k, I'd say your margin is razor thin. Fixing up houses like that adds up super fast.

[jimbo]

Originally Posted by Melensdad

In modestly priced homes the market is the hottest city in the region. Houses selling in an average of 11 days. But the city is dominated by working class families buying 3 bed/2 bath 1800sq ft homes and those are the homes that end up with bidding wars as buyers try to acquire them.

Not sure what the market is like for upscale home in this city. And clearly this is an upscale home. Which is why it would be a risk. Literally 1/4 mile south of this home is the nicest upscale town in the area, so move this home 1/4 mile and the house would be in the hottest market for luxury housing. But its not in that city. Not in that school district. So it is a risk.

Speaking as a person who did this analysis for 30 years, the question is not what it costs to rehab, but what someone is willing to pay for a rehabbed upscale home in that area.

My experience has been that larger homes in not so desirable areas or small towns move very slowly, if at all. 1 or more years on market is not uncommon. 400 K for 4000 sq feet of rehab is an indication of an oversupplied or non existent market. My opinion.

[thepooguy]

it would have to be bought at a VERY reasonable price if that's all it would sell for. grand rapids mi area that house would bring huge money if it were tastefully remodeled. like 8 to 900,000. things are way out of hand here on housing though...too many jobs bringing too many people. I feel sorry them based on what they are spending as when a correction comes they are screwed.

[300 H and H]

To bad you can not just load it on a Truck and ship it to a new location.

Mine....

Regards, Kirk

[Melensdad]

Well we will be bidding on a DIFFERENT, far more modest home.

Perfect for a new family, large yard, will retail for $135,000-ish when completed.

Nice neighborhood.

Desirable city.

Quiet, established neighborhood with big trees.

We are hoping to get the house for somewhere under 1/2 of its retail price. Roof is 4 years old, water heater is 4 years old, furnace is 7.

No known structural issues based on some info from last year. Interior photos from August of last year show no damage to walls, ceiling, etc. (We can NOT get inside to see if anything has changed) Kitchen and bathrooms are dated but everything looks in good shape. Might be (if we could be so lucky) paint, carpets, counter tops and cosmetics then re-list for sale.

Exterior needs paint, landscape clean up. A couple shingles look bad. Deck looks rough and might need new decking.

Whole thing looks like a time capsule from 1965.

[jim slagle]

Originally Posted by Melensdad

Well we will be bidding on a DIFFERENT, far more modest home.

Perfect for a new family, large yard, will retail for $135,000-ish when completed.

Nice neighborhood.

Desirable city.

Quiet, established neighborhood with big trees.

We are hoping to get the house for somewhere under 1/2 of its retail price. Roof is 4 years old, water heater is 4 years old, furnace is 7.

No known structural issues based on some info from last year. Interior photos from August of last year show no damage to walls, ceiling, etc. (We can NOT get inside to see if anything has changed) Kitchen and bathrooms are dated but everything looks in good shape. Might be (if we could be so lucky) paint, carpets, counter tops and cosmetics then re-list for sale.

Exterior needs paint, landscape clean up. A couple shingles look bad. Deck looks rough and might need new decking.

Whole thing looks like a time capsule from 1965.

This one looks more managable and won’t have you tied up near as long.

[Melensdad]

Originally Posted by jim slagle

This one looks more managable and won’t have you tied up near as long.

This one is a PRACTICAL flip.

The other one is an EMOTIONAL flip.

Actually I'd gladly sell my house and move into the other one. Square footage is slightly larger for the living area than my current house. But its a lot less property to take care of, a lot less stuff to do around the property AFTER it is fixed up. It would be an easier property to take care of in my "old" age.

My wife said NO. She doesn't want to live there. I think largely because our current home has a guest apartment over the workshop/garage and that keeps her sister close. This house no accommodation for her sister.

[Melensdad]

Bidding has begun in earnest. Price has climbed $10,000 but its still very low. Reserve price still not met.

We will know if we won in about a half hour.

If not, we try for the next house on our list.

Lovely Mrs_Bob is somewhat excited about this one. Emotion must be tempered. But its hard not to get excited.

[Melensdad]

Won the bid at $66k

It is below the bank's reserve price.

Bank now has the option of selling it to me at my bid or trying to relist.

If we are within $10,000 of their reserve they will likely let us have it. Should have an answer within 24 hours. But we are optimistic we will get it. The lovely Mrs_Bob is very excited. She is so burnt out on teaching that its nice to see her excited for this new venture of hers.

[jim slagle]

Good luck!

Hope the bank comes through.