Should I renovate this house

I have never owned a home, so I thought I would outline this situation and hope that some of you out there have some experience renovating and renting out homes, and can tell me if this is a totally naive proposal:

The beginning

Our land lord is thinking about selling the house my roommates and I live in, so I started doing some market research about homes in our area. The thing is, my neighborhood is kind of “up and coming.” It is a mix of nicely renovated rented homes, some sort of run-down homes, and a bunch of boarded up houses for sale.

The potential purchase

So in my search, I called an agent about a house a few doors down, which is one of the boarded up houses. I asked her how much they were asking, and she laughed at me and said “make an offer.”

The agent told me they’ve recently dropped the asking price from $75,000 but she couldn’t remember what to. (I will call her later to find out.) The property tax bill shows a fair market value of $70,000. But she also told me that the owner inherited the house from her aunt, and that she has been trying to sell it for over 8 months.

The assessment

I am going to take a look at the inside of the house this weekend. Even if it’s a silly idea, sometimes I just need to satisfy my curiosity to really understand what a project like this would entail. I also want to see for sure what the layout of the interior is, and if the house is simply old, or if it’s been trashed or destroyed in some way.

Please let me know if you have suggestions for what I should look for when I tour the house!

What I know

The house is 1 level, probably on a slab. I think it may be 4 BR 1 BA, as that is a pretty typical configuration in the older houses in this area. So first, I would want to put in a second full bathroom. (3 bedroom, 2 bath would be my ideal. I can see renters sharing a bathroom with one other person, but definitely not sharing 1 bathroom between 4 people.) I have no idea what moving around walls and adding plumbing like that would cost, but the foundation should be plenty big enough for all that. I'll put lots more thought into layouts later, but maybe it would be more worth it to leave it as only 1 bathroom and only rent out 2 rooms. The backyard is a decent size, and I would switch the current chain link fence for a tall privacy fence. The renovated homes in the neighborhood are valued at about $150,000 by the tax office, but I'm not sure if any of them could be sold for that much at the moment. So, any thoughts? Has anyone renovated an old house? What would the purchase price need to be to make remodeling worth it? Would a bank even give me a loan?
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About Kellen Cooper
Kellen Cooper is a CPA.