Posted by PBoone on April 19, 1999 at 22:02:28:
Most Rehabbers would want to or have to purchase the property @ approx 50%fmv before repairs.
Pat
Value of Fixer-Upper For FLIP - Posted by CThompson
Posted by CThompson on April 19, 1999 at 20:12:01:
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I think I have found some properties that I may be able to flip. I’m guessing that the next step would be to find out who the owner is am I correct? Then after that, how do I know how much the property is worth, and then how much do I offer? I do have a friend that does appraisals, so I’m thinking about using him. But is there a way to do it on my own?
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One of the properties states that it is assessed at $15,000 below value. How much cushion do I need to make the flip worthwhile?
Assessed Value vs. Market Value - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on April 19, 1999 at 23:30:33:
CThompson,
Be careful! The “assessed” value of a property refers to the value that your county tax assessor places on the property. Assessments for tax purposes are not a good way to determine “market” value. Seldom does “assessed” value equate to “market” value.
You’ll get a better idea of “market” value, or what a willing seller will sell for and what a willing buyer will pay for, by using comparables. Your appraiser friend should be able to provide you with comps for your properties. This is NOT a detailed appraisal of the property in question. Rather, it is a listing of recent sales, in close proximity to the property in question, that have sold within the past 6 months.
Once you have an idea of market value, you’ll need to determine the amount of rehab work required. Once you make contact with some rehabbers, they’ll let you know how much they would like to make on these transactions. When you factor in their profit, estimated repair costs, your profit, and any carrying costs, you subtract these numbers from the fair market value (FMV) to determine what you can offer for the property.
To find rehabbers, try running an ad that states…
Handyman Special
U-Fix, Low Down
Call 123-4567
Quick Example:
FMV: $100,000 (after repair)
Rehabber Profit: $15,000
Fixup Costs: $12,000
Your Profit: $8,000
Your Carrying Costs: $1,000 (say, 2 months to flip @ $500/mo)
Your Offer: $64,000
This is generic, but I think you get the idea.
I hope this helps.
Bill K. (AZ)