Posted by Bert G on March 27, 2000 at 14:14:42:

Are you planning to hold this as a rental, or fix up and resell? There are some numbers you haven’t provided that are essential.
How much would the property be worth in perfect condition after repaired value (ARV)? Is it worth the same as your $79K property?
What would it rent for?
If a rental, what would be your monthly expenses?

One renouned guru has a formula for buying houses to rehab and sell. Take the ARV times 70% and subtract the repairs. That should be the absolute maximum you should offer, and you never offer the maximum. (ex: $80,000 ARV X .7 = $56,000 less $5,000 repairs = $51,000)

For rentals to hold, I have an analysis form I use thats a little complicated to go into here, but if you e-mail me I can FAX it to you. Basically subtracts the desired cash flow from the NOI to show what’s available for debt service to figure the maximum loan the property would support, then adds what you are willing to pay up front to arrive at an offer. My form assumes you won’t put down more than the PCF will replace in 5 years, but you can tweak it for your own needs.


Posted by Val on March 27, 2000 at 12:47:41:


I have found a foreclosure which is being sold for a bank by a realtor at market price. It needs about $5,000 worth of cosmetic work, such as painting, new tile in the kitchen, new carpet throughout, etc. If the property is listed for $74,500, what is a suggested offer to make to the realtor? I also own a property on the SAME block. I’ve had that property for four years and it could probably sell for $79,900. I purchased it at market value for $72,000 and it was in excellent condition. I would like to purchase the foreclosure at a price that would provide $200 a month positive cashflow. Can give an idea of what I should offer?

P.S. There are no other lean holders on the property!




Posted by Mike on March 27, 2000 at 22:59:38:

I have only been investing for three years now but I will tell you two very important things I have learned after reading thousands of posts and spending thousands on courses.

1.NEVER become attatched to a property. If you cant get it for what you want to pay move on to the next one. The good deal will come along.

  1. If your first offer doesn’t embarass you you are offering too much. I used to think this was kind of silly but I just woke up one day with a new attitude that if I cant make money at this then why do it. I do not mean make silly offers but I have offered 50% of asking price on several occasions and got the property.

I am currently not purchasing any property that the vendor will not finance. I know this limits my purchase potential but it is just more proof you dont need banks or credit.

Good luck,
Castle Enterprises Inc.