So I am putting my first offer/deal together. I would really appreciate any insight or advice that you can offer me, as I'm a total newbie - but I am taking action, which I've heard is important in almost every single BP podcast I've listened to so far.
The house has not been listed yet, so I'm getting in early. The property is being sold by a daughter who is moving her mom out of state to live with her, since her mom's health has deteriorated. So I believe it to be a good opportunity, since these are motivated sellers. It's my sister-in-laws neighbor, so I know the neighborhood pretty well. It's close to a park and in a good part of town. They don't owe any money on the house.
Comps in the area (3 bed and 2 bath) are selling for $170k-$200k without any rehab done to the house. The seller is considering listing the house at $190k, which I believe to be above market average price for the state the house is in. I believe a more realistic current asking price would be $170k, and that is by looking at comps available from zillow and Remax. Sadly I don't have access to the MLS system, so I can't pull actual comps yet. The zip code is GA 30078, if anyone wants to check it out.
After inspecting the house, I believe there is ~$50k worth of rehab that needs to be done, in order to flip the house. With that in mind, I think we could get $220k for the house once it's rehabbed. New houses in the area of comparable size are selling for $300k. So if I did the math....
After Rehab Value = $220k (since I'm conservative; and I feel like I'm pulling the number out of thin air. Admittedly I need to go look at more homes in the area to get a better feel.)
70% rule = $154k
- Rehab = $50k (Mind you I've not priced everything out, which would be my next step, but I have a list of everything that should be done)
Thus I should offer them a $104k, or walk away?
My question is.... do you think $104k is too much/too little/just right/can't decide cause you need more info? What other things should I be considering?
For financing, I have enough funds that I can pool from family partners to cover these costs.
My goal is to flip the house, so that I can build the capital to flip more homes. Once I have enough capital built, I'll start moving towards holding multi family properties.
Thanks in advance for taking the time to look at this.
If they are considering listing it for $190K, you are in a tough spot already, as that is the number they will have fixed in their mind, and if you come in around $105K, they may politely tell you to go away. In a strong seller's market, which we are in now, sometimes you have to bypass some of the straight line analysis numbers and go for more of a feel for the deal. I am licensed, you can check out my bio, if you want to call me I can discuss it with you. Sounds like this house is in Snellville???
Yeah, that is mostly what I'm concerned about. I would imagine that an offer of $105k would get straight out rejected. I would love to get in touch with you. I'm sending you a private message, so that we can connect.
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