If you’re curious about how fixes and flippers evaluate properties, this video is for you.
We will show you the house just outside Seattle. I have never actually seen this property — just a photo. The wholesaler brought it to me. So I’ll take you in and show you how I analyze the property when I first walk it.
We are looking for giant red flags, construction issues, floor plan designs. So we can put together a nice package in a property so we don’t miss anything. Let’s check it.
Tips for performing a thorough walkthrough
A thorough walkthrough is very important when you first go to your accommodation. After that, when you buy a house or a project, you won’t have any major problems or unexpected pop-ups.
Here are some tips:
- Take as many pictures as you can. We will act to prevent you from returning to your accommodation. Use your smartphone. We all have one with us. Put your photos in Dropbox or Google Drive. Label the folder the address of the property and date it.
- Understand construction costs. Be aware of all warning signs and consult an expert about what may not be completely understood. Floor plan problems, appearance problems, sewer problems, etc. Scan everything up and down and note everything that’s confusing. Again, be sure to document everything with a photo. Take pictures both near and far.
- We will do a thorough walkthrough. Take your time as you walk the property. I will act so that I will never walk in this house again. How thorough can you be? If possible, don’t walk it with the seller. They can be distracting. Run the process the same way each time. That way, you won’t miss anything.
- First walk the entire look. Examine the condition of siding, roofs, gutters, sewers, electricity, foundations, and windows.
- Then walk through the interior. Let’s start in front of the house. Is it updated? Do you smell it? Can you “taste the money”? And most importantly, pay attention to the floor plan. If it’s not working, can I open the wall? Do you feel it is right for the buyer?
- Create a spreadsheet. This is a great way to analyze rehabilitation from room to room.
Initial analysis of this property
This house happens to be about 100 years old. Currently, it has 4 bedrooms / 1 bathroom, which is not an attractive layout in terms of functionality. There is no master bedroom either. To solve these problems, create a master and add a full bus or a 3/4 bus.
We also want to open the living room to the kitchen and enlarge the existing bathroom by one to bring it to today’s standards. Currently, there is only about 2 feet of space between the bathtub and the sink. (I think people might have been much smaller 100 years ago.)
The kitchen needs to be burned down and a new staircase is needed to reach the second level. There is also a chimney in the middle of the house that needs to be removed.
In addition, the electricity and ducts throughout the property are not up to date (and the plumbing is probably not up to date). Also, it is not a true 4 bedroom. And a kicker? The whole house smells like cat urine!
The wholesaler who brought us this property wanted to sell it to us for $ 181,000. They said the mod would cost about $ 60,000 and the house would probably sell for about $ 300,000.
However, many of these fixes are not easy. They don’t have the correct numbers. I don’t think this Reno will cost about $ 60,000, but it will be more. If you want this to be a true “legal” 3 bedroom / 2 bathroom home, you’re spending 100 grounds from the top of your head. This includes consideration of internal fixation, siding, wooden windows, roofs, etc.
It is no exaggeration to say that this property will not be purchased. You might rethink whether you can buy it from a wholesaler at a cheaper price, but this is not a good deal.
If you want to know more about rehab analysis, I highly recommend J. Scott’s book, which changed my life many years ago.It is called A book on rehabilitation cost estimatesAnd Bigger Pockets recently released a new edition.
Do you have any other questions as to why you are likely to take over this transaction? Or do you have a question about how to evaluate a property during the first walkthrough?
Please leave a comment below.