MLK/Inaugaration Day

Happy MLK/Inaugaration Day.
So Saturday I looked at 4 houses in Rowlett. Brenda Houghton with ReMax was my agent.  I know Brenda from Carlisles and Gallagher, and she helped a mortgage client of mine find a house. She is a very knowledgeable and hard-working agent.
House 1 was a short-sale of Brenda's, so it's still owner-occupied.  2,800+sf, 5/3.5 two story with a pool.  Needs foundation work already bid for about $7,000. The rest is cosmetic.  Biggest issue is popcorn ceilings. The engineered wood floors, all walls tape/bed/texture and paint (tbtp).  Kitchen cabinets can remain and new granite c'tops and appliances. Pool needs a new heater and patio area needs painting. ARV is around $178k.  I'll submit an offer $85k but $90k-$95k may be my settling in spot. Net profit potential is around $34k
House 2 needed an appoint even though it's vacant. Same layout as House 1 pretty much. Two story, about 2,700 sf.  It's been on the market almost a year. We found out why.  The absentee owner was there to greet us!  Mr. Ho.  He decided to follow us around and speak to us in broken English in a very loud voice.  It was aggravating as he tried to "sell" me on the house and how great it was.  So I began to point out to him all the defects and issues with the house.  That didn't sit well with him.  He said that it was all fixable and that's why he had it so cheap.  It was a market value home of around $170? that he had listed for $148.  He had "repaired" the house, but it was all too obvious.  He didn't repair, he patched.  Too many things to list here.  When in the kitchen, I made the comment to Brenda that the rust-brown floor tile had to go, he looked at me and said "you no like the tile?"  I said "no, i don't. but it really doesn't matter what I like, it's what my potential buyer is going to like".  He didn't understand that.  And that's why his house is still on the market after over a year. On the side of the house, the whole rear half of the house's bricks were bowing out about halfway up and then moved back to even near the roof line.  Major issue for me.  He said that was not a big problem.  Wrong. Two major foundation cracks in the front of the house under the two left and right upstairs windows were poorly patched.  This is a curb appeal issue.  I knew anyone pulling up to the house could immediately look and see the patches and not even get out of the car to see the inside. The only way around this is to paint the entire exterior of the house.  We bailed on this one.
House 3 was back on the same street that house 1 was on, but it wasn't listed.  I noticed it had postings on the door and window when approaching House 1.  It was a HUD home that's been winterized since Oct 12.  Brenda called a couple of numbers and eventually reached someone about the property.  But it was Saturday and she gave Brenda another number to call on Tuesday when offices reopened.  It looked in really good shape from the outside.  And, a pool. This one is still in the air until Brenda can get me more information.
House 4 was about a mile north of the first 3.  Again, a two-story, but this one was somewhat smaller, about 1,800sf.  The garage had been converted into a game room, and that sf was not included.  I'm debating about converting back into a garage, since it had a corner fireplace in it and some nice addons. But most people want a garage for storage and their cars.  So I'll probably convert, or add on a nice carport across the back patio and the garage. The kitchen was done out nice with nice wood cabinets and black granite ctops.  However, it was small, and it had an island.  With the island, only one person could stand at the sink.  So the island has to go. And there's a wall between the kitchen seating area and the living room.  I'll open up that wall, either partially or totally, and make the kitchen/kitchen table/dining room table/Living room area all open.  There appeared to be a small amount of movement so I'll have MBR Guaranteed Foundation Repair come give me an estimate on the foundation.  I like this a lot.  But, they're asking $89,900 for the property.  With an ARV of $130k and rehab costs of around $29k, my Q&D says offer $57k.  I'm offering $60k.  That should give a NET profit of around $20k.  We will submit and offer for $60k.
Please don't look at the Gross Profit numbers some wholesalers will give you.  You need to take into consideration sales costs, if you're going to flip retail.  You can always have Gross Equity on your books if you hold for rental.  It looks nice.  But you'd better estimate about 8%-10% of your ARV for selling costs and then figure out your net profit, and max it out at 20% or $20,000.  In the case of House 4 I'm right at $20,000.  So I'd better not have any major surprises!
I'll let you know later house these work out.  House 1, being a SS, won't have any decision for probably a couple of months. House 4 should have us an answer within a week or so.  House 3 Brenda will find out more information this week.
Have a great day off!