Author Topic: Punch some sense into me  (Read 1100 times)

toganet

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Punch some sense into me
« on: August 25, 2017, 01:06:53 PM »
I realize what I am about to describe is not the most mustachian scenario, but I'm looking to bounce my face off the steely fists of some folks here to at least make me feel bad about it if I go through with it.

There is a house for sale for $23k that needs about that amount again in repairs to be habitable (roof, windows, updates to kitchen, bathrooms, interior and exterior paint).  The after repair value of this property is about $67k.  For family and nostalgia reasons I am highly tempted to buy, repair, and either flip or rent it to my parents, who would be good tenants and whose lives would be improved by living there.

I've run the numbers using Bigger Pocket's calculators for both a flip and rental scenario, and the numbers work out.  I could profit $10-15k on a flip, possibly more depending on the market a year from now.

Reason I'm posting this question here is that I'm not really in the market for an investment property, and don't necessarily want to take on that challenge right now as I'm working on a startup.

So, is this a true opportunity, or is my emotional attachment clouding my judgment?

ketchup

  • Magnum Stache
  • ******
  • Posts: 2633
  • Age: 26
Re: Punch some sense into me
« Reply #1 on: August 25, 2017, 01:16:05 PM »
I'd probably want a bit more than $10-15k worth of meat on the bone, especially if this is your first rodeo.  A major unforeseen issue could wipe that out bringing your profit down to $0 or negative.

bestname

  • 5 O'Clock Shadow
  • *
  • Posts: 46
Re: Punch some sense into me
« Reply #2 on: August 25, 2017, 01:19:27 PM »
If I could help my parents out and possibly make 10-15K I would do it. But I'm not working on a startup. Do you have a sibling that could split the work/profit/good child feelings.

toganet

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Re: Punch some sense into me
« Reply #3 on: August 25, 2017, 01:21:37 PM »
This would be the fourth property I've purchased, but the first that needs significant repair.

I should add that this house is across the street from one of my sisters, down the hill from another, and was my childhood best friend's house when we were growing up.  The last time significant renovation was done I was a helping hand (though at 16 or so I wasn't much help other than gopher).

The only open question I worry about, renovation-wise is electrical.  The house was built in 1900 but has had at least some electrical work done since.  I was not able to gain access to the basement to check the box, so I would need to know where that stands before I made a decision.

toganet

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Re: Punch some sense into me
« Reply #4 on: August 25, 2017, 01:24:15 PM »
If I could help my parents out and possibly make 10-15K I would do it. But I'm not working on a startup. Do you have a sibling that could split the work/profit/good child feelings.

My BIL (across the street) has offered to help, and he's eminently capable.  We'd contract out the roof and the exterior paint, but could handle the rest as well.  There would be no lack of semi-skilled manpower, I just need to be willing to provide the capital and project management.

tralfamadorian

  • Bristles
  • ***
  • Posts: 396
Re: Punch some sense into me
« Reply #5 on: August 25, 2017, 06:10:23 PM »
If you want to do it for your folks, great.  But I agree with ketchup- there's not enough profit for a flip. 

toganet

  • 5 O'Clock Shadow
  • *
  • Posts: 39
Re: Punch some sense into me
« Reply #6 on: October 05, 2017, 02:30:20 PM »
Figured I'd come back and update on this.  I did end up buying this property (closed yesterday).  The asking price went down as I was contemplating, and I made an offer slightly under that.

Now the real adventure begins!  Luckily my nephew has stepped up and is acting as property manager / general contractor, and we've already got repairs underway.  I'm hoping to have my folks moved in by the end of the year.  Let's hope the warm weather holds.

former player

  • Magnum Stache
  • ******
  • Posts: 2543
  • Location: Avalon
Re: Punch some sense into me
« Reply #7 on: October 05, 2017, 03:16:35 PM »
No facepunches from me.  You are investing not just in the house but also in your family's neighbourhood and benefitting your parents all at the same time.  Congratulations, and I hope it all works out for you.
Be frugal and industrious, and you will be free (Ben Franklin)

powskier

  • Stubble
  • **
  • Posts: 246
Re: Punch some sense into me
« Reply #8 on: October 08, 2017, 06:08:40 PM »
Good luck, I'll be curious if rehab costs come in as projected, in my experience the final bill is at least 25% higher.