Posted by HR on March 23, 2000 at 06:26:50:
Your holding costs, utilities, sales costs, purchase costs, insurance, etc. typically come to about 15% of the after repaired value of the house. Hence, to figure out your offering price, simply take the after repaired value, multiply by .85, subtract the repair costs, subtract your desired profit, and you have your max offer you should make. Be conservative on the after repaired value; be liberal with your repair estimates (especially if you are new to rehabs!)
On your deal, the numbers work out to:
180 (after repaired value) X.85 -40k profit - 50k repairs (you will find other problems) = $63,000 max offering price.
There is a good article in the money making section (?) here on fire damaged properties. I am not aware of any good books or courses on the subject.
I am currently renovating my first fire damaged property. Are the utilities on? Do you need inspections from the city? (Uggg). Etc.
Mine, too, is cosmetic fire damage. Don’t underestimate the seller’s desire to dump this, especially if they already collected an insurance check. Mine was owned by the Money Store. They originally wanted 24k, dropped the price to 8k, I offered 1k, they countered at 2.5k, and we settled on 2k. It will take about 7k total to put in new electrical, new plumbing, resheetrock rooms, etc. Get good help, cheap.
Hope this helps. What other concerns do you have? Please be even more specific.