How much should I offer??? - Posted by Mary L. CO

Posted by jasonrei on August 11, 2003 at 18:12:59:

My HML (who doesn’t do CO) would go 65% of $225k (ARV), minus $15k… so roughly $131k.

If this deal was on MY plate I would run numbers like this:
225k sale
minus 15k repairs
minus 20k holding costs (6 mos. interest on the HML, taxes, insurance, lawn maintenance, interest on the investment my HM loan doesn’t cover)
minus 17k sales costs (4% agt commission, a little advertising, closing costs, buyers costs I might pay, additional repairs the buyer may want me to make)
Equals about $173k to work with for purchase and profit.

I’ve never bought a deal over $115,000 so I don’t know what kind of profit I’d look for on this. Maybe as little as $25k depending on the “feel” I got for the deal. I’d also figure in $5-6k in costs for the hard money loan. So $173k - $31k = $142k is about what I’d pay for the house.

The 70% of ARV less repairs formula happens to be what I’d pay, too. Cool. Notice I didn’t plug in a fudge factor of 10% like a lot of other investors would.

How much should I offer??? - Posted by Mary L. CO

Posted by Mary L. CO on August 11, 2003 at 15:40:50:

Please help with first deal. I found a house through realtor. A
After repair value is $225,000
Listed for $200,000
Repairs $15,000
I am planning to pay 70% of FMV less repairs which is $142,000-150,000

The question is - will this offer fit into hard money lenders requirements.

When LTV is considered - what value exactly is it?

Then purchase costs - which include realtors comissions for buying and selling - this is quite a bit.

Please help - is there room for everything?

Thanks a lot

Mary L.