Posted by Jim FL on February 04, 2002 at 22:31:21:
J.C.,
I think the formula you are referring to is perhaps the one Legrand and others espouse.
It goes something like this;
70% x FMV - Repairs - your profit = Max offer.
Although this is a good formula for safely getting a good deal, you may also want to contact some local cash investors and see what their buying criteria is.
Some will want a certain number for their profit, others will only buy at a certain value ratio.
Each has what they are looking for, and when you find that out, it becomes MUCH easier to complete deals.
I once flipped houses pretty regular to a guy who wanted houses with cosmetic only repairs, things like paint and carpet, but would pay up to 85% of value.
He bought these with his credit line, rented them out section 8, and then refied them to free up his credit line. He was an easy customer.
Posted by Zack W on February 04, 2002 at 23:02:20:
JC,
When I tie up a property to “flip” or “wholesale” to an investor I run all of my numbers as I would if I were going to rehab it. Then from my maximum purchase price figure I subtract $6,000 [my profit]. I make my offer with that number and if it gets accepted, then my investor will make at least 10k on the back end.