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Real Estate Wholesaling

Why is Your Wholesale Deal Not Selling?

by Stephani Davis | July 1, 2010
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Last week I got an email from a beginning wholesaler asking me for advice. He told me he was considering doing deals virtually in another market because there were “no buyers” in his. He had recently put three properties under contract with the intent of wholesaling them to end buyers, but ended up backing out [...]

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Real Estate Investing

5 Steps to Calculating the Purchase Price for a Rehab Property

by Justin Pierce | October 18, 2009

Knowing what to pay for a home is critical in the rehabbing game. I’ve come up with my own method for determining my purchase price for a property. While I don’t think my method will work for everybody, maybe it will give you a good place to start or perhaps, some new ideas.

There are a lot of different variables that you’ll have to take into account on any specific deal; I’m interested to know from other rehabbers how their math looks.

Calculating the Purchase Price for a Rehab Property

Step 1: Know the value of the property. – That is the resale, after repairs value of the home. Make sure you view actual recent comparable sales. Once I feel confident I know what a property is worth I deduct 26% from that price. 20% is what I like to shoot for in a profit. With the market firming up here lately I’ve been cutting that margin to 16% on real good deals. On bigger deals or on deals that feel a little more risky I stay firm with the 20%. I wouldn’t go much lower than 16%.

Historically homes sell on average for something around 8% less than asking price. If you’re only pricing in a 10% profit then you might end up just doing a practice flip. A practice flip is a deal where you don’t make any money. Essentially you donate all of your time and effort for free to the end home buyer. The other 6% is the number I put in for closing costs when I sell the home. I’m a licensed Realtor so I list the home myself, which will save me a little. So in my case, 4% goes to Realtor fees and the other 2% is what I budget for other closing costs. You can choose to try to sell the home yourself and save the Realtor commission. If you are not a Realtor and you plan on hiring a Realtor then you probably will need to budget 6% for the Realtor fees plus another 2-3% for closing costs. I always anticipate having to pay some of my buyers closing costs.

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Economy

Real Estate Dispatch – 1/3/07

by Joshua Dorkin | January 3, 2007

A few days have passed in 2007, and there are a few stories I think are worth a look. Enjoy! Manhattan real estate market remains strong The Manhattan Market is INCREDIBLE! “The average price of a Manhattan apartment rose to more than $1.14 million in the fourth quarter of last year, up 5 percent compared [...]

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Economy

Biggest Drop In New Home Prices In More Than 30 Years

by Charles Feldman | October 27, 2006

Interesting news the other day out of the Commerce Department and reported in the New York Times about new-home prices: The median price (the statistical point where half the houses are priced less but half are priced more) of a new house nosedived 9.7 percent last month when compared with the same month one year [...]

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