Shell at 165, rehab at 140, and the 70 rule says my max is 129

Your 70 rule number is right and it's also not the number that'll kill you. 129.5 assumes you're out in 90 days.

I'm on my fourth heavy one and I've never done 90 days. Not once. Best was 118, worst was 197. On a 270 all-in with hard money at low double digits plus taxes and insurance and utilities on a vacant house, I'm running about 4,600 a month all in. Two extra months is 9,200 off the top. Four extra months is 18,400, which on a deal like yours is most of what you were going to make.

So when you back into your offer, either take the 70 down to something like 65 or line-item the carry at 150 days and subtract it explicitly. I prefer the second because I can see what I'm paying for.

Also the two dead contracts is information. Ask the agent what killed them. Sometimes it's financing on a house no bank will touch, which helps you. Sometimes it's the inspection found the thing you haven't found yet.

Different angle, and I know it isn't the one you asked for. What's the lot worth empty?

I've been looking at land holdings for two years and in the markets I watch, a vacant three year old shell on a decent lot in a submarket with 385 comps sometimes prices closer to lot value plus demolition than to house value. If teardown plus new build pencils for a builder in your area, your competition for that 165 isn't other flippers, it's someone who never intends to keep the addition at all.

That cuts both ways for you. If the lot alone supports 110 to 130, your downside if the rehab blows up is a lot flatter than it looks. If the lot's worth 40, you're fully exposed to the rebuild.

165 for a shell where finished is 385 sounds like a city problem to me. Out where I look the shells are 28k and the finished comp is 119k, and the rehab is the same 140 you just wrote down. That's why nobody guts anything here.

Not useful to you directly, sorry. But it's why I'd say the ratio you should be watching is rehab to ARV, not rehab to purchase. Yours is 140 on 385, so 36 percent. That's above the range people usually quote for heavy work and it's before the addition surprise. It doesn't mean no. It means there's no room for a second surprise.

@hollow's 36 percent is the line I'd stare at too.

I've got one open right now that started at 31 percent of ARV and is sitting at 44 because we opened a soffit and found the previous owner had run the main stack through a bearing wall in a way that meant the wall was doing about half of what it was supposed to. 22k and five weeks.

@bramble, on your actual decision: offer at your number with a structural contingency, and pay the engineer during the contingency period instead of before. Out of state heir with two fallouts isn't going to be insulted by 129 as much as you think. If they say no you've lost nothing but a phone call, and if the addition turns out to be the cheap version you've got room to come up.

What I wouldn't do is pay 900 to price a repair on a house you might not get.