Contractor · Temecula, CA · Member since 2015 · 190 posts · 36 votes
I'm looking to get started with fix and flips, I'm not 100% on how to estimate what to offer on a foreclosure. Is there a rule that I can use? I've heard about 65% of ARV, is that minus repairs? So if an ARV is $200k x 65%= $130k minus say $30k for repairs, so I can use $100k for my ideal purchase price? Thank you in advance. Nick
Real Estate Agent · Woodbridge, VA · Member since 2014 · 8 posts · 3 votes
11y
@Stephen Seaberry an easy way to see what they purchased the house for is in the tax record. As an agent, i look at the most recent deed transfers, or MLS listings if they are available.
I would think to determine how much are you trying to net on the flip? Then, what are the comps in that particular area? That should give you a good estimate of what you need to offer. Are you using the Flip calculator (by BP)?
New Bern, NC · Member since 2015 · 36 posts · 12 votes
11y
I've put together a couple excel worksheets for fix and hold and fix and flip for buying foreclosures in North Carolina. I can email those to you directly if you're interested. We have bought many pre-foreclosures over the years and these have served me well.
Investor · Hoffman Estates, IL · Member since 2014 · 434 posts · 185 votes
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Be careful using formulas, they're not universal. The reason people use 70% is 2-fold.
1) A lot of hard money lenders won't lend past this LTV
2) This figures in 20% profit and 10% in fees/realtor commissions etc on the back end.
I'd suggest looking to see what other flippers are paying for similar houses in your area and working your numbers that way. Look for flips in your target and see how much they paid, and then see how much they listed AND sold for. That should give you a good idea of what your "70%" should be.
Investor · Waynesville, NC · Member since 2014 · 408 posts · 121 votes
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Like @Scot Howat said, be careful relying on formulas too much. They are a great way to run a quick analysis on a property, but you need to verify all of the numbers yourself. The formulas try to build in all of the costs/fees, but they can vary wildly in different parts of the country. I always like to get a solid estimate of the rehab, closing costs and holding costs and then add my desired profit margin on top of that. Learning to accurately estimate these costs, and the ARV is the key to success.
Realtor · Springfield, VA · Member since 2013 · 30 posts · 8 votes
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Originally posted by @Account Closed:
I've put together a couple excel worksheets for fix and hold and fix and flip for buying foreclosures in North Carolina. I can email those to you directly if you're interested. We have bought many pre-foreclosures over the years and these have served me well.
Id love to check out the spreadsheets as well Sarah
Real Estate Agent · Woodbridge, VA · Member since 2014 · 8 posts · 3 votes
11y
@Stephen Seaberry an easy way to see what they purchased the house for is in the tax record. As an agent, i look at the most recent deed transfers, or MLS listings if they are available.
Investor · Hoffman Estates, IL · Member since 2014 · 434 posts · 185 votes
11y
I use Redfin,com but's it's not available in all areas. Its just like Realtor.com.
What I do is I pull up sold comps in the last 3-6 months and I find flips. They should be pretty easy to identify, especially if that's your niche. The 4 things I look at are....
1) How much did they buy it for
2) The margin (bought price vs sales price %)
3) The level of rehab that they did (paint/carpet, new kitchen, full gut rehab etc)
4) How long it took from purchase to new listing (rehab time)
If you scroll down to the Property History section, there's a link to view the MLS listing when the investor bought the house, and you can see the price.