Reducing risk on first deal

2 Replies

When getting ready to close one's first deal as a newcomer, what are some steps to take to minimize the risk involved?

Be as sure as possible that it is a GOOD deal. No, a GREAT deal. No, a SMOKIN' deal. That's it: SMOKIN'!

[Plenty of threads will tell you how you can crunch those numbers; I trust you are already reading them?]. Cheers...

Hi Joshua,

I have been following some investors in my area and found they are using the 70% rule. I have been researching the area that I want to flip in this week with my realtor. Three of the houses she showed me were already rehabbed. All three houses were in a B class neighborhood. The first house I looked at sold for $175,000, and then after rehab was put back on the market for $253,000. The other two were bought and sold similar to the first house. The FMV in this neighborhood are in the mid $200,000's. If you multiply $253,000 by 70% it equals $177,100. That would have been the maxim price to offer. The investor who picked this property up made a good deal.

The example here is for rehabbing.  If you are buying to hold, then you will use the 2% and 50% rule as well.

I hope that helps you.


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