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Diamond in the Rough with Double Potential – not for beginners. Metro Kansas City [code: 1005]

Posted by Powered by Simply Do It on February 11, 2024
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Why not for beginners:
This house requires a lot of cosmetic work and tender loving care (TLC). After walking through it and watching the video, there's plenty that needs to be addressed, but nothing major.
As much as we can this house is more suitable for CASH purchase but do think it is possible to buy with a mortgage.
WARNING: the house is not clean and does not show well – 4 minutes walk-through video: https://youtu.be/2pIjHW-hVKk
What's exciting about this house

On the market for 100+ days

Doesn't show well – needs a lot of TLC – unappealing for homeowners

Good neighborhood/area with good schools

There is nothing in this price point in the area

Purchase + reno: ~$220k, ARV: ~$260k – aprox. $40k in equity
Extra upside potential: finished the basement to ass more official sq ft & bedroom + bath counts for increase in value and rent – can be done in the future.



This is a RANCH house, AKA an desirable floor plan, and has lots lots of character and attractive elements.


In the map below you will see the green dot representing this house and the red marks are all properties owned by other SDI clients in the immediate area.

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The Plan
  1. Purchase (cash or mortgage) – aggressive offer of $175k (-$185k)
  2. Renovate – see video and more details – assume 1.5-2 months
  3. Lease for ~1850/mo
  4. If cash – refi use delayed financing.
  5. Projected cashflow after reno with 30% down is ~$4500/year (3X more we normally see)
Remodeling
What's Do we believe would be needed based on an initial walk-through
  • The good news:
    • Furnace was working well and seems to be new.
    • Windows looked newer.
    • We have not seen sign of foundation or floor cracks – inspection will reveal more.
  • What we anticipate will need to be done:
    • Some boards on siding may need attention.
    • There was some trash in the front and still in the garbage bins. 
    • Gutters needed some love. 
    • The front stoop needed some love too. 
    • Garage door needs to be painted
    • Paint entire house + garage
    • Wood floor repair
    • Replace the carpeted area with floor or new carpets
    • Roof – at the moment, we dont know what's the roof shape
    • Deep cleaning 
Interested? Have more questions?
Want to better understand if this is a good fit for you?
Let us know
Property Specifications1
 Bedrooms3
 Bathrooms2
 Square Feet1662
 Year Built1964
 Garage Size2
 Schools Rating (scale 3-30, 30 is best)20
Lot size (sq ft)               10,750
Purchase AssumptionsMy Offer
Offer used for analysis$175,000
Suggested offer (low)$175,000
Suggested offer (high)$185,000
Asking$209,900
Market Value (after improvements)$255,000
Estimated Improvements (lower)$30,000
Estimated Improvements (upper)$40,000
Estimated Closing Costs$1,750
Estimated Mortgage Costs$1,409
Other Fees At Closing (pts, . . . )$1,225
Total Cost (estimated)$214,384
Original listing date11/2/23
DOM (days on market – TODAY)100
Financing Assumptions 
 Down Payment (%) 30%
 Down Payment Amount$52,500
 Financed Amount$122,500
 Interest Rate 6.750%
 Mortgage Term (Years)30
 Monthly Mortgage Payment43.5%$795
 Cash Outlay (Total Out of Pocket) $91,884
Estimated Financial AssumptionsMonthlyYearly
Rent (upper)*$1,825$1,900$22,800
Rent (lower)*$1,750$21,000
    
Property Taxes $225$2,700
Insurance $150$1,800
Repairs75$100$1,200
Property Management Monthly (%)7.2% 
Property Management Monthly ($)$130$1,566
Leasing Fee68%$51.3$616
HOA or Fixed Costs$0$0
Vacancy Rate 4.0% 
Total Fixed Expenses39.7%$725$8,695
Total Expenses (Fixed + Mortgage)$1,519$18,230
Financial Analysis / Deal Attractiveness
Years:510
 Cap Rate5.0%6.5%
 Net Cash Flow$23,098$59,282
 Equity Increase$62,749$140,468
 Total Gain$85,847$199,750
   
 Average Cash Flow/Year$4,620$5,928
 Average Cash Flow/Month$385$494
 Average Gain/Year$17,169$19,975
 Average ROI93.4%217.4%
 Annual ROI18.7%21.7%
 Projected Property Value$310,246$377,462
Property Ratings Suggestions
 Item   Suggested Criteria (Min.)This PropertyFAVORABLE /
INSUFFICIENT
 Schools (scale of 3-30, 30 is the best) 1420FAVORABLE
 Square Feet  1,0001,662FAVORABLE
 Bedrooms  33FAVORABLE
 Bathrooms  22FAVORABLE
 Year Built  19701964INSUFFICIENT
 Average Cash Flow (at year 5)  $125$385FAVORABLE
 Average ROI (at year 5)  15%18.7%FAVORABLE
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Disclaimer

Information contained herein was obtained from sources deemed reliable, however, Simply Do It and/or the owner(s) of the property make no guarantees, warranties or representation as to the completeness or accuracy thereof. The presentation of the property is offered subject to errors, omissions, changes in price and/or terms, prior sale or lease or removal from the market for any reason without notice.

The analysis is provided “As Is”. All the information is believed to be accurate (except for the small effects of some simplifying assumptions), but is not guaranteed, and depends on the values entered for the property. This analysis is intended for the purpose of illustrative projections. The information provided is not intended to replace or substitute for any legal, accounting, investment, real estate, tax, or other professional advice, consultation, or service. Simply Do It and/or the owner(s) are not responsible nor liable for any damages arising from the use of the analysis info. 

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