First possible FLIP

[Frank Caputo]

I came across a VA foreclosure in my area a couple of days ago and wanted to gets some opinions on it.

Myself and a close friend wold be purchasing it together. The VA is asking for $55k and we want to put in an offer for $50k. The comps in the area are anywhere from $104 to $112. We would price it aggressively at $102,500 for a fast sale.

The house needs some repairs and depending on how far we go it could vary from $10k to $25k. I expect no more than $20k and I feel like that's still a little high. It's in a descent school district and close to Fort Bragg, I will be meeting with a contractor there today to get a more accurate assessment of the repair costs.

By the way this would be my first fix and flip so any tips are appreciated.

Thanks

Frank

[Joe Villeneuve]

First off, don't ever make an offer based on what you think it would take to get the property.  Always, and I can't stress this enough, ALWAYS make offer ONLY based on you making a profit or cash flow...preferably both.  You should reverse engineer your offer.  Figure your offer like this:

• Sales comps in area (base on same style/size/type of house)
• Subtract:
  • Profit (start with that, if you don't make a profit why bother)
  • Rehab (based on a bid...not guessing)
  • Cost of money (financing, etc...)
  • Holding costs
  • Commissions
• What you have left is what you offer and no more.  If you don't get the property because someone else bid higher (even if it was only $5 higher), you didn't want it anyway.

The numbers don't lie, so never argue with them.  You'll lose every time you do.

Think of it this way.  Real Estate investing is a lot like playing poker...and no because R.E. Investing is gambling...it's not if you do it right.  It's like poker for the following reasons:

• Never send good money after bad money.
• Losing pots is not the same as losing money...as long as the money is still on the table...it's just in a different pile.
• Stay in the game...make your bids/buys accordingly.

Keep this in mind at all times.  Sometimes the best deal you make is the one you don't.

Joe Villeneuve
REcapS Systems