I am dumbfounded by the high prices investors are paying for property.
This happens to me time and time again. I just got off the phone with a seller of a house in Florissant MO who told me that 5 other people made offers on his house and that my offer was less than half of what the next highest offer was.
I offered $20k on a house with an ARV of $100k. It needed $41k in rehab (and I know I can get my rehabs done for much less than most too.)
This means that someone else offered more than $41k. But why, how on Earth can they do that? Maybe my comps were off, but they can't be that far off.
Here is what the numbers look like with a $41k offer. And they accepted an offer higher than that.
$100,000 sales price
-41,000 purchase price
-41,000 rehab cost
-12,000 other cost
-----------------------------
= $6,000 profit
This is not a good deal. I have seen this happen hundreds of times in the last several months. Am I missing something? Why are so many people paying so much for properties now?