Question
An investor at a real estate auction is ready to bid on an old 1,400 SF, three bedroom, one bathroom house. It is outdated but
An investor at a real estate auction is ready to bid on an old 1,400 SF, three bedroom, one bathroom house. It is outdated but structurally sound; the interior needs a lot of work. The buyer intends to purchase it, renovate, and resell it for a profit.
Given the following budget and the expectation that it can be resold for $392,000 after completion of the renovation, how much can the investor afford to pay and still stay within budget?
Direct costs of renovation work: $ 45,000
Indirect costs (Architect, Permits): 3,500
Contingency: 5% of direct costs
Marketing and closing costs: 7% of resale price
Overhead & Profit: 10% of resale price
Maximum purchase price to stay within the budget:
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