Specialist · Member since 2019 · 5 posts · 2 votes
I came a cross a deal
ARV 150k On the low side can be more like 175k
3bed 2 bath 1471 sq ft
Asking 99k
Rehab 60k
My offer will be 70k (is that to high?)
Looking to get a hard money lender. Not sure rate yet.
Maybe will brrrr if numbers add up which I don’t think they will bc rent in the area wouldn’t be more the $1500 a month but my taxes will be $4800 a yr.
Or wholesale to a contractor that flips
What are you thoughts? Ideas? Something I’m missing?
Looking to get a hard money lender. Not sure rate yet.
Maybe will brrrr if numbers add up which I don’t think they will bc rent in the area wouldn’t be more the $1500 a month but my taxes will be $4800 a yr.
Or wholesale to a contractor that flips
What are you thoughts? Ideas? Something I’m missing?
Without knowing your market and how much do rehabbers make, below is the formula you can use:
ARV x 90% (10% is selling cost like paying a realtor, closing cost, and assumes you need 90 days holding cost, etc)
less repairs
less rehabber profit
equals Maximum Offer for Rehabber to pay for the property
If the ARV is between $150K and $175K, use the average - $162,500. Also, for a $60K repairs, the rehabber might want to make at least $30K profit for the time and effort he will spend doing a $60K repairs
Hence, you have:
$162,500 x 90% - $60K - $30K = $56,250
So if you're going to rehab it, offer $55K
If you're going to wholesale it, better get it for $50K so offer $45K
If you're going to BRRR it, your maximum offer is $61,875, so offer $60K (I calculated it based on 75% x ARV - Repairs formula. When you refi, you might get up to 75% of the ARV. By doing this, you will get all your money out).
Given they are asking $99K, my guess is to just move on and not make any offer because your offer is going to be too low.
Specialist · Member since 2019 · 5 posts · 2 votes
7y
@Michael Ealy
Thank you Michael!
That is what I wanted to hear. Now my charm will have to make this work ( yeah right ) but I do see what you mean. I felt at 70k they would say bye. If they want to liquidate maybe the will take the 65k and run. If God allows then is meant for me. It’s my first offer. You really helped me out. I been hearing, reading, watching as much as I can for the past 3 months. But until I do it I can’t learn anymore.
One thing you taught me is don’t make an offer to get a yes but it will end up a bad investment.
In a perfect world I was thinking my initial offer of 70k would be accepted go in with contractor and truly analyze house if it’s 45k now my 70k offer is good. If not I will need to change offer to the amount you mentioned.