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.
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)
- 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
- 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.
@Frank Caputo - Any updates post your meeting with contractor?
Absolutely, so myself and a very good friend of mine put an offer in at $52k. The contractor was honest and pretty close on his bid to what I thought it would cost. He quoted me $10k and I believe that I will do all the demo and that will save us more. I have spoken with several other contractors and if we win the bid I will meet with them as well.
Ultimately our realitor believes the house can sell for at least $105k. I will be sure to keep posting as the days pass. We are both very excited and would love any advise .
Sounds like a good first deal if all comes through. Keep us posted and ask questions when in doubt or need 2nd opinion.
There are lot of experienced investors here who have been there and done that.
Wish it would have pulled through but a least we're making moves! I'm disapointed but excited at the same time. Onward and upward!
Well, this morning my realtor called and said that the person who won the bid had to pull out. She said he was a realtor and was not allowed to bid on the foreclosure.
Does this sound valid, are realtors not allowed to bid on VA foreclosures, does the public get first right?
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