Posted by greg on September 29, 2003 at 10:30:23:
Yes - the tax man taketh.
What profit margins should I expect on REO’s? - Posted by David
Posted by David on September 22, 2003 at 12:48:22:
I’m trying to figure out what profit margin’s I should expect on REO properties…I’ve heard some people say that they won’t make an offer on a property unless they can make 20-25K and others have stated only 10K.
Most of these properties seem to list for close to After Repair value…after making the repairs/upgrades…profits will be slim…what is generally accepted?
Also, does everyone sell their properties for full appraisal value or do they sell it for a little less to roll it quicker?
Re: What profit margins should I expect on REO’s? - Posted by Brent_IL
Posted by Brent_IL on September 22, 2003 at 17:37:19:
Rehabbers that I’ve talked with say that after the cost of everything; repairs, labor, both sides of the transaction?s costs, etc. a rule of thumb they use is to net the amount of the repairs and labor. The reason that they shoot for twenty thousand dollars is because rehabbers run into the unexpected on a routine basis. This is all I know about it.
Example -
Purchase price - $50,000
ARV - $100,000
Repairs - $20,000
Transaction costs - $10,000
$100,000 - $50,000 - $20,000 - $10,000 = $20,000 net profit, i.e., the same as repairs.
They’ve said they need to buy cheaper if they intend to list the property to exit.
Re: What profit margins should I expect on REO’s? - Posted by Greg
Posted by Greg on September 22, 2003 at 14:38:30:
I’m relatively new to REI, but I have done 3 REO’s
over the past 3 years (1 a year - part time).
I’ve made $15-20k average on each REO.
I bought the homes for about 40% less than FMV after rehab - put
20% more into them for rehab, then made a 20% profit.
These are starter homes, built in 1970’s, in PA.
I do quality rehab work and price it at FMV, but they
still sell quickly (within 2-3 weeks).
Example - pay $75k, put $20k into it, sell it
for $120k. Keep in mind- this is not an especially hot
market of PA, so banks aren’t looking for max. price
when selling their REO. Your market could be different.
Re: What profit margins should I expect on REO’s? - Posted by Charles
Posted by Charles on September 24, 2003 at 12:25:45:
Are you subject to the capital gains tax when rehabbing houses and selling at ARV?
Re: What profit margins should I expect on REO’s? - Posted by Charles
Posted by Charles on September 24, 2003 at 12:20:31:
Are you subject to the capital gains tax when rehabbing houses and selling at ARV?