First Deal - Posted by Nick

Real Estate Investing
1

Posted by Alexander (Fl) on January 07, 1999 at 10:04:58:

Sometimes. You want to make sure that the comparables are not hand-picked using only the highest sales. by the way ask for sold comparables, asking-price comparables are useless.

By contacting an appraiser yourself, you will have an unbiased estimate and a realistic market value for the house.

2

First Deal - Posted by Nick

Posted by Nick on January 07, 1999 at 08:05:07:

I am about to make an offer on my first REI deal. I would like to have some feedback on the viability of this deal and my approah.

  1. The house is a VA forclosure 3bdr/2bths, with an estimated 2500 - 3,000 worth of rehab to be done.

  2. The sales price is 88K, the approx FMV is 121,000.

  3. I have a line of credit for 60 days for the 88K and a mortgage company that will give me 80%LTV/ 30 year fixed on the FMV after the improvements.

  4. The only problem with this house is that it’s backyard is mostly rocks.

  5. Similar houses in the area rent for $800 to $850. DOM for most houses sold throught the MLS is 60 - 90.

Any suggestions on how to maximize the profits on this deal.

Thanks,

Nick

3

Re: First Deal - Posted by Reif

Posted by Reif on January 08, 1999 at 02:16:02:

>>. Similar houses in the area rent for $800 to $850. DOM for most houses sold throught the MLS is 60 - 90.<<

If you’re gonna try ot flip it on a conventional sale, you have to take the DOM into account for your costs.

I like the L/O or the wrap idea on any property vs. straight rental (cash flow same or better and locks in back end profit).

But I’m a new guy, so I’m not sure of the market for either in your area (or mine for that matter).

Reif

4

Re: First Deal - Posted by Alexander (Fl)

Posted by Alexander (Fl) on January 07, 1999 at 09:03:17:

Nick;
make sure the FMV estimation for this house is not exaggerated as a selling point. Houses that rent for $800 to $850 are usually worth somewhere around $80,000 to $90,000. There is an exception to be made for luxury homes that rent for less than 1% of their FMV.
Lines of credit are excellent if used correctly. Most will require a 1.5% monthly payback on the outstanding balance.
If your house-after improvements-does not appraise for the $121,000 you’re hoping for, you’ll be stuck with part of your line of credit in the property.
Call an appraiser and ask him or her to do a “finger search” on this house and see what they tell you.
if their answer is $110,000 or over…you got yourself a good deal.

5

Re: First Deal - Posted by terrid

Posted by terrid on January 07, 1999 at 08:22:40:

I would buy a lot of low growing plants and mosses, plant them in the rocks and then feature the low maintenance garden as a selling point.

6

Re: First Deal - Posted by Nick

Posted by Nick on January 07, 1999 at 09:08:25:

Would comparable FMV of other houses in the area serve the same purpose?

thanks,