how to get good offer prices, finding good comps, correct repair estimates, and formulas to crunch the numbers.

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how to get good offer prices, finding good comps, correct repair estimates, and formulas to crunch the numbers.

9 posts by 6 users

Rod Coleman

Real Estate Investor · Chester, VA

41 posts
1 Influence
1 Award

Icon_minipost Sep 04 '08, 06:26 AM

I am fairly new but what i have so far in my learning is that u can pretty much find comps anywhere but that doesn't mean there actuate, and as far as estimating in some book and programs they tell u to pick a number, for example what i have learned is that depending apon the shape of the house going from ugly to real ugly to junk 10,000, 20,000, to 25000 and also depending apon the size needing to be in the area of 1000 to 2000 square feet then to take these unreliable number in to this formula ARVx70%-repairs = MAO and back off slightly for profit now like i said i am new so ,but i do know this is complelely dumb for me use do gurus bring your answers and add your knowledge or subtract from this and tell us newbies how to correctly run the numbers and come up with offer that guarantees u money even if u have to flip the deal over to and end user of course that is if it sales lol...

Edited: 06/26/2010 at 05:50AM by Rod Coleman

Michael Rossi

Real Estate Investor · Ohio

4587 posts
14256 Influence
14 Awards

Icon_minipost Sep 04 '08, 05:54 PM

If you truly want to know property values in your target investment area, then get out of the house and go look at 100 houses (inside and out) that are for sale. If you don't KNOW values at that point, look at another 100!

As for rehabbing, that 10,000, 20,000, 25,000 - that's one of the dumbest rules I've ever heard!!! If you've got a book or course that tells you to just "pick a number" for rehabbing, I'd throw that book or course in the trash NOW! You could certainly lose your butt using general numbers like that. Again, the answer is HARD WORK! Learn what things cost. Look at houses and then go to Lowes and check out the materials prices for specific repairs. Once you start looking seriously at properties, have a few contractors give you bids.

Good Luck,

Mike

Edited: 06/26/2010 at 05:50AM

Rod Coleman

Real Estate Investor · Chester, VA

41 posts
1 Influence
1 Award

Icon_minipost Sep 06 '08, 09:35 PM

Well i know that thats why there is an question about it, how where do u get your estimates from

Edited: 06/26/2010 at 05:51AM

Jon Holdman

Real Estate Investor · Denver, Colorado

11859 posts
75547 Influence
15 Awards

Icon_minipost Sep 06 '08, 10:35 PM

Experience. If you're new to the business, there's no substitute for getting some contractors to come give you bids for the work. Once you've have bids for some job, such as replacing a hot water heater, you can use that for future work. Others, like a roof, would need to be adjusted based on the size.

For some kinds of work, you can call a contractor and say "I need a roof replaced. Its 30 squares, 3 in 12 pitch, and has two layers on it that need to be torn off. Can you give me a ball park figure."

For things like carpet and paint, you can apply Mike's materials based method. You should be able to do to any carpet store and given them your dimensions and get a quote that's pretty close. For plumbing and electric, figure out the parts cost then add somewhere between 5X and 10X for labor.

Edited: 06/26/2010 at 05:51AM

Jon Holdman, Flying Phoenix LLC

Rod Coleman

Real Estate Investor · Chester, VA

41 posts
1 Influence
1 Award

Icon_minipost Sep 06 '08, 11:27 PM

That's great information, So do your saying that until i get a composite list of
Roof repair,Electric,Pluming,siding,etc cost to just use an company that will give u a free estimate.

Also another investor in my area was saying that if the house is pretty to multiply the squares but 10$ and that should give u to reproduction cost
and, if its ugly to multiply by 20$
and if its a piece of crap by 25$
Now I don't know if its right. He is a pretty good whole seller about 3 to 4 deals monthly with 5 years experience
but, i don't know if its the correct thing to use because when i run my numbers his MAOs are always much lower then my MAOs. now he also stated that the area matters the type of area matters the standard nice house in a nice neighborhood your formula would be ARV X 70%- repairs= MAO - Profit margin= cash offer
nice house in bad area ARV x 65%- repairs = MAO
Nice house in WAR Zone ARV x 60%- repairs=MAO
what do u thing about these?

Edited: 06/26/2010 at 05:51AM

Tony Tomasek

Real Estate Investor · Henderson, Nevada

161 posts
893 Influence
4 Awards

Icon_minipost Sep 07 '08, 06:05 AM

I have had success estimating ARV by looking at as many sold comps that fit the description of your property as possible, listing prices dont count in current conditions. Count on having to sell at a 15% discount or more off current market price in a declining market area. Make sure the comps are less than 6 months old (3 months preferrably) and sold in 90 days or less on market at the selling price. Find a range of prices for these and estimate toward the low end perhaps 30-40% of range for sales value.

Edited: 06/26/2010 at 05:51AM