Comments on: Determining Maximum Purchase Price (MPP) http://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/ Learn, Network, Invest Sun, 12 Feb 2012 02:43:58 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Richard Dale-Mesaroshttp://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/#comment-93314 Richard Dale-Mesaros Wed, 30 Mar 2011 01:50:12 +0000 http://www.biggerpockets.com/renewsblog/?p=11666#comment-93314 One cost we seem to see popping up recently is the "buyer or lender request", or in other words, stuff that arises from the buyer or their LENDER'S inspection. On one house recently, when we finally made it to the THIRD list of items, the one which really annoyed me was the lender's request that we painted the garden shed!!!!! Good grief. Duly painted. Duly closed...Assume a number of around $1500 for these types of additional rehab costs.Now go find a deal! :) One cost we seem to see popping up recently is the “buyer or lender request”, or in other words, stuff that arises from the buyer or their LENDER’S inspection. On one house recently, when we finally made it to the THIRD list of items, the one which really annoyed me was the lender’s request that we painted the garden shed!!!!! Good grief. Duly painted. Duly closed…

Assume a number of around $1500 for these types of additional rehab costs.

Now go find a deal! :)

]]> By: J Scotthttp://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/#comment-93310 J Scott Tue, 29 Mar 2011 23:32:39 +0000 http://www.biggerpockets.com/renewsblog/?p=11666#comment-93310 I tend to focus in the lower price point properties -- generally $90-140K resale -- so my profit targets may be different than others (and definitely different than Will's and other CA investors)...But, I shoot for a very, very conservative minimum of $15K on each property if the sales price is up to $120K. When I say "very conservative," I mean that in the past two dozen properties I've done, I've only not hit that target once.Additionally, I like to see that $20K is a pretty reasonable target if I stay on budget and estimate my ARV correctly.In actuality, we average about $25K per flip, so being conservative is serving us well, though it probably means we're missing out on some deals that would otherwise be pretty good.For higher end properties (anything over $150K), I like to see that a reasonable profit target is 15% of the resale price, with 10% of the resale price being my very conservative estimate (so again, very minimum of $15K on a $150K resale). I tend to focus in the lower price point properties — generally $90-140K resale — so my profit targets may be different than others (and definitely different than Will’s and other CA investors)…

But, I shoot for a very, very conservative minimum of $15K on each property if the sales price is up to $120K. When I say “very conservative,” I mean that in the past two dozen properties I’ve done, I’ve only not hit that target once.

Additionally, I like to see that $20K is a pretty reasonable target if I stay on budget and estimate my ARV correctly.

In actuality, we average about $25K per flip, so being conservative is serving us well, though it probably means we’re missing out on some deals that would otherwise be pretty good.

For higher end properties (anything over $150K), I like to see that a reasonable profit target is 15% of the resale price, with 10% of the resale price being my very conservative estimate (so again, very minimum of $15K on a $150K resale).

]]> By: Will Barnardhttp://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/#comment-93309 Will Barnard Tue, 29 Mar 2011 22:27:26 +0000 http://www.biggerpockets.com/renewsblog/?p=11666#comment-93309 This is a great tool for others. I would follow up with the similar question as Justin made: How do you come up with your profit amount, is it based on a specific cash on cash return, based on a % of something or what? This is a great tool for others. I would follow up with the similar question as Justin made: How do you come up with your profit amount, is it based on a specific cash on cash return, based on a % of something or what?

]]> By: Justin Schnettlerhttp://www.biggerpockets.com/renewsblog/2010/03/10/determining-maximum-purchase-price-mpp/#comment-80014 Justin Schnettler Thu, 11 Mar 2010 04:35:00 +0000 http://www.biggerpockets.com/renewsblog/?p=11666#comment-80014 J-Do you have a correlation between MPP and Profits that you go by? J-

Do you have a correlation between MPP and Profits that you go by?

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