BiggerPockets

The numbers have to be there. Understand that most cash buyers will probably be using hard money. If they are using hard money they are paying points + at least 15%.

Then think about the renovations that need to get done. Does the roof need to be ripped off and replaced? Is the foundation screwed? or is it minor cosmetic work.

What's the rent in the area? After renovations and interest will the investor cash flow? A lot of this stuff can be done on the back of an envelope for a quick idea, but you should get a good idea of the cost of renovations and financing.

On top of that - Know your area. If your investor is going to have to wait 8 months to sell the house, you need to factor that in to the price. That's 8 months of interest payments, utility payments, tax payments, insurance payments...you get the idea.

Think of it as if though you were investing to fix and hold/fix and flip. What's the absolute max you would pay for the house given all the relevant factors.

Then go from there.

Those are the basics, yes. But remember that cash flow is dependent on a number of things - in particular your monthly expenses. For starters you need a good idea what the PITI is going to be.

These are pretty much fixed, and you can get a solid idea of what the prices are by shopping around for an insurance policy yourself.

I'm a big believer that the more information you have, and the more prepared you are, the better positioned you are to make the sale.

There's a big difference between marketing a house saying: ARV 250K Ask 35K and saying: ARV 250K Rehab: Roof, Kitchen, Exterior,etc. (with prices for each) Comparables, and rents in the area.

You want to break it down for them so that their due diligence doesnt require a lot of footwork. They may do everything over again, but if they see your numbers are exactly their numbers, they're going to work with you.

Principal, interest, taxes, and insurance

That's when you assume that they will be using a HML with 15% + 1-3 pts. Even better, if you get to know your buyers then you will know what interest rate they are paying.

Thanks Chris and Erik.

Well Im currently trying to build a buyers list. Its pretty tough. I am also trying to decide if I should build my buyers list first or put a few properties under contract and shop them around

Sounds good, thanks