Ready for my first deal
So, I finally got the knowledge to start investing, and I decided to act on it. I started an LLC, and went to a local REI club meeting. I found a nice Fannie Mae REO property, and I called the listing agent. He told me that this property has water damaged floor, and it would cost between $800 to $1200 for the work. He also told me I need to get a Proof of Funds letter to see it. I said no problem, got a POF letter from a transactional funding company, and e-mailed it to him. He was very pleased to see the letter, and said he is glad to talk to somebody who knows what he's doing. I will go see the property tomorrow, and I'll probably make an offer on it. It looks pretty good from the pics posted online, so I hope the floor should be the only issue. The house is marked around 80 grand below ARV. Now my only hope is to find a buyer, get the earnest money deposit, and complete the deal. Wish me luck. :D
Sebastian
Most Popular Reply
First, be careful of an online estimator for ARV. These things can be quite far off a realistic ARV. The only way to do it properly is to look at actual recent sales (ideally within the last 3 months) in the neighborhood that are comparable to the house in terms of size, number of bedrooms/baths, lot size, age, etc. And notice that I said, recent "sales", not recent listings.
Also, make sure you have a good solid estimate for the other costs of the property - rehab, holding costs, purchase and sales costs. Even if you are planning on just wholesaling to an investor, you want to make sure the person you flip to can still make a good return, or they won't want to work with you again.
With a solid ARV estimate and a good estimate of total costs, you should be able to figure out how much you can offer.