Looking for Advice on a Good Deal - Posted by Shelton_n_VA

Posted by JP on August 24, 2003 at 23:41:44:

How would you buy it from him for $81,900, spend $2,500 for repairs, and make a decent profit if you could only sell it for $95,000? That’s barely a 10k profit assuming you paid all cash, had no closing costs, no selling costs, no holding costs, etc. etc. Just curious …

Looking for Advice on a Good Deal - Posted by Shelton_n_VA

Posted by Shelton_n_VA on August 24, 2003 at 23:11:19:

Hello, My name is shelton and I a junior in college and a beggining real estate investor. I am currently working on my first deal. I believe I have a good understanding, but need some advice to fill in the blanks and make this possibilty a reality.

I found a property in bad shape, in my neighborhood, selling for $79,900. I estimated that it needs around $2500 of rehabbing. Similar properties in my neighborhood sell for around $95,000 to $105,000.

I am looking to sign a contract to purchase, with a 60 day contingency clause, and immediately sell to a rehabbing investor for a fee of $2000.

Right now I want to talk to the realtor and do a walk through. Find a contractor that gives free estimates. and begin creating a list of potential investors to flip the house to.

I guess I am wondering if this is a good deal?
IF it is a good deal, does anybody have any advice to help me through this deal?

Re: Looking for Advice on a Good Deal - Posted by Jasonrei

Posted by Jasonrei on August 25, 2003 at 24:17:38:

I am a rehabber. I would look at the deal like this:

95000 sale

  • 2500 repairs (out of 30 houses I’ve done the least I ever spent on repairs was about $5000)
  • 5500 sales costs (3% commission, $250 listing fee, the rest is my closing costs + some of the buyer’s)
  • 8200 holding costs (6 months interest, taxes, insurance, maintenance)
  • 15000 profit (the minimum I’d want on this size investment)
    = 63800 purchase (the most I would probably pay if I used a private lender, if I went hard money I would pay about $3500 less)

Re: Looking for Advice on a Good Deal - Posted by Dell-Ohio

Posted by Dell-Ohio on August 24, 2003 at 23:29:51:

Hello

We do a lot of rehabs. If your information is accurate we would purchase this property from you if we had a comfort level that it would sell for 99,000.

There are a couple things that however seem incongruent …

>" I found a property in bad shape … I estimated that it needs around $2500 of rehabbing."

Either it is not in bad shape or it needs a lot more than 2,500 in rehab. $2,500 is barely enough to paint or put new carpeting into an average house.

Maybe it just looks “bad” to you because it is dirty or messy?

If you can tell us what needs to be repaired I can quickly calculate a ballpark price for rehab.

As a general rule we want a minimum profit potential of 20,000. If it really only needs 2,500 in repairs we would purchase it with less profit potential.

OH and NEVER EVER offer asking price, unless its a helluva deal and there is a high likelyhood that someone else will buy it away from you before tomorrow.

My Viewpoint

Dell-OHio

Re: Looking for Advice on a Good Deal - Posted by Shelton_n_VA

Posted by Shelton_n_VA on August 24, 2003 at 23:58:48:

Thank you for your time and advice. Well when I looked at the house, I found that it need some landscaping, a new window on the side of the house. Some painting on the shutters, the front door, around the windows, and the garage door. And the porch banister needs to be fixed and painted. I would happy to get a free estimate from a contractor and also send you some pictures.