Posted by Trish on June 09, 2006 at 14:16:29:
I figured that I would have to come down on the arv of the property. It will appreciate as that area is going to raise in value. I read that property values in that area are rising due to revitalization. And the other houses are being rehabbed now. I based my arv on comps in that area and came down off it from there. I think it will be worth more than I am figuring. Thanks for the advice though. I appreciate any experience viewpoint I can get.
advice for three deals - Posted by trish-houston
Posted by trish-houston on June 08, 2006 at 13:31:35:
I have three different deals I am looking at. These are my first deals. I have talked with all three owners. one is an estate-one fsbo-one tired landlord. It looks that each of these can be assigned off. That is my goal. The numbers are what are confusing to me. I am budgeting 16%arv for expenses+repairs+assignment+investor profit. my arv is on the low end of comps. Do I need to figure what it will take to get it financed for the investor? two of the deals don’t have more than 20k difference in asking price and arv. Is that not enough. I don’t think it will be. seems to be cutting close. But I am running into ALOT of investor homes already rehabbed in the ads I am calling. I was told there is a hugh amount to be made in this area but I am not seeing it in the paper and on fsbo websites. But you cant assign bank owned prop. So do I keep trouping or is there a different way to get more leads?
Re: advice for three deals - Posted by Joe
Posted by Joe on June 08, 2006 at 14:21:30:
16% of ARV does not sound like much. Although it would be better to see the exact numbers. It sounds like these have slim margins and are not good deals. Give us the actual numbers and we can help you better.
Re: advice for three deals - Posted by Joe Kaiser
Posted by Joe Kaiser on June 08, 2006 at 14:18:27:
The concept of budgeting 16% for repairs and profits doesn’t make
much sense to me.
In order to contingent contract, you need lots of white space. White
space being equity, whether existing or easily created. The more white
space, the better, obviously.
16% doesn’t begin to approach it. Not really even close. 16% is nothing
more than air at this stage.
You need to be able to strike deals with deep deep discounts
approaching 50% of value. There are ways to do this, but it isn’t with
pretty houses in nice areas of town (at least not often).
You need to focus on people with big problems, people who absolutely
are on tilt and who want out of their mess today.
Those are the people who will deal and those are the people you put
under contract.
Joe
Re: advice for three deals - Posted by trish
Posted by trish on June 08, 2006 at 14:59:02:
It is 16% just for the acquistion and all fees with flipping, repairs are seperate from this. one deal for example… arv est 125-130k, 20k expenses and fees, 16k repair,20k investor profit,5k assignment fee. This leaves me giving 60-64k for it correct? They recently dropped price to 74,500. Values are going up and current rehabbing going on in this area. This house is the biggest and nicest in that area as it is. Would be awesome with repairs. alot of room. This could be a good deal i think but dont know if I can bridge the gap between 64 and 74k. Its an estate. they are motivated but not extremely so. been in family forever and i think is free and clear. suggestions?
Re: advice for three deals - Posted by Chris in FL
Posted by Chris in FL on June 10, 2006 at 21:51:05:
Trish,
The numbers you show at asking price don’t add up; you have total costs, expenses, fees, profit, etc. that add up to more than ARV. If you think it will work at $64k, make an offer of that or less. If you are trying to wholesale, don’t put a lot of money down, and you don’t have a lot at risk. Get it under contract, contact investors and try wholesaling. If it works great. If not, you might lose your deposit. Just make sure contract to buy is assignable, and has a way or ways for you to get out, so you can’t be sued for not performing. Best wishes!
Re: advice for three deals - Posted by Ron M
Posted by Ron M on June 08, 2006 at 16:05:25:
“This house is the biggest and nicest in that area as it is.”
A word of caution, it is common for an investor to overestimate the ARV on the “biggest” and “nicest” home in an area. It is also, typically, more difficult to sell the best home in a neighborhood, especially for top dollars as the other homes and area will bring down the value of your home.
Please, don’t let the urgency to do a deal, blind you to the real facts of the numbers. The biggest mistake an investor can make, in my opinion, is over-paying for a property.
Ron M (WA)