We made our first offer - Tell us how we did
Most Popular Reply
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
2y@Jordan A., if those were your numbers those were your numbers. I don't see how you could have gone higher than you offered and still made any worthwhile money with those numbers.
However, could those numbers be CHANGED?!?
For example could your scope of work be different and open up any other possibilities to make more money. It sounds like a ranch home, so could you have done a "pop top" and added a 2nd floor to it doubling the size. Maybe an $80k renovation could have gotten you to a $300k ARV in that way and justified paying over asking price.
A deal is what YOU make out of it not what is presented to you. The listing agent may advertise it as a potential straight forward flip but you're the one making the deal and need to see if there are other opportunities.
40 Replies
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
@Jordan A., if those were your numbers those were your numbers. I don't see how you could have gone higher than you offered and still made any worthwhile money with those numbers.
However, could those numbers be CHANGED?!?
For example could your scope of work be different and open up any other possibilities to make more money. It sounds like a ranch home, so could you have done a "pop top" and added a 2nd floor to it doubling the size. Maybe an $80k renovation could have gotten you to a $300k ARV in that way and justified paying over asking price.
A deal is what YOU make out of it not what is presented to you. The listing agent may advertise it as a potential straight forward flip but you're the one making the deal and need to see if there are other opportunities.
- 2yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
Quote from @Jordan A.:
My business partner and I (tried) to make our first offer today on a potential flip. We’ve only been looking for about a week and a half and this one hit the market right in our back yard. Here are the details:
House: 900sf 3 bed 1 bath on a crawl space with no garage
List Price: $90,000
Comps: $185,000
Reno: $40,000
Closing Costs: $12,000
Holding Costs: $6,000
Taxes: $6,000
We offered list price with 5 day inspection and 3 weeks to close. The problem is the price point, the thing was HOT. The realtor told us she had 5 offers all above list price, some of which were from other investors. If we had a little more experience, I would have felt comfortable going to war. However, given that we haven’t even gotten our company bank account set up yet (I know) we felt it best to bow out.
Given all of that, I would love to hear your feedback on the deal. Would you have taken it? How much would you have offered? Do you steer clear of bidding wars altogether? Any and all feedback is welcome. We want to learn as much as possible so feel free to tear this thing apart!
The numbers are not bad.. I would always stick to a price that is good (black and white) on investments, the numbers should not be gray.
Also, the Reno costs in the whole thing can be the ones that change the most. What needs to be done, what could be changed and what could be taken away with the ARV staying the same. That is what I am thinking about.
The McKernan Group4.957 Reviews - Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
It definitely looks like there's some equity in that property. I would say that you need to be comfortable going over asking on properties like this that appear miss-listed. The important thing is what the property is worth. Not how much it's listed for.
This is a type of confidence that comes with experience so don't sweat it.
Quote from @Andrew Syrios:
It definitely looks like there's some equity in that property. I would say that you need to be comfortable going over asking on properties like this that appear miss-listed. The important thing is what the property is worth. Not how much it's listed for.
This is a type of confidence that comes with experience so don't sweat it.
I agree. The hang up for us was how much over asking price should we go? We decided to let it go and we will see what it sells for and use it as a learning tool. Its hard to know how far to pinch your margin, especially when things can go wrong/cost more than you think.
Quote from @Peter Mckernan:
Quote from @Jordan A.:
My business partner and I (tried) to make our first offer today on a potential flip. We’ve only been looking for about a week and a half and this one hit the market right in our back yard. Here are the details:
House: 900sf 3 bed 1 bath on a crawl space with no garage
List Price: $90,000
Comps: $185,000
Reno: $40,000
Closing Costs: $12,000
Holding Costs: $6,000
Taxes: $6,000
We offered list price with 5 day inspection and 3 weeks to close. The problem is the price point, the thing was HOT. The realtor told us she had 5 offers all above list price, some of which were from other investors. If we had a little more experience, I would have felt comfortable going to war. However, given that we haven’t even gotten our company bank account set up yet (I know) we felt it best to bow out.
Given all of that, I would love to hear your feedback on the deal. Would you have taken it? How much would you have offered? Do you steer clear of bidding wars altogether? Any and all feedback is welcome. We want to learn as much as possible so feel free to tear this thing apart!
The numbers are not bad.. I would always stick to a price that is good (black and white) on investments, the numbers should not be gray.
Also, the Reno costs in the whole thing can be the ones that change the most. What needs to be done, what could be changed and what could be taken away with the ARV staying the same. That is what I am thinking about.
I definitely agree. We felt that $90k kept us safe and anything north of that got is into trouble with the unknowns.
Quote from @Kevin Sobilo:
@Jordan A., if those were your numbers those were your numbers. I don't see how you could have gone higher than you offered and still made any worthwhile money with those numbers.
However, could those numbers be CHANGED?!?
For example could your scope of work be different and open up any other possibilities to make more money. It sounds like a ranch home, so could you have done a "pop top" and added a 2nd floor to it doubling the size. Maybe an $80k renovation could have gotten you to a $300k ARV in that way and justified paying over asking price.
A deal is what YOU make out of it not what is presented to you. The listing agent may advertise it as a potential straight forward flip but you're the one making the deal and need to see if there are other opportunities.
Given the demographics of the neighborhood we felt like we could only get so much of a return. To your point, we could have added another bathroom for probably another $10,000 and added value to the home. But based on our research, even 4/2 homes in the neighborhood that had been rehabbed were only going for just north of $200,000. So I don't know how much of a return we would have gotten on that extra $10,000.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Jordan A.:
Quote from @Andrew Syrios:
It definitely looks like there's some equity in that property. I would say that you need to be comfortable going over asking on properties like this that appear miss-listed. The important thing is what the property is worth. Not how much it's listed for.
This is a type of confidence that comes with experience so don't sweat it.
I agree. The hang up for us was how much over asking price should we go? We decided to let it go and we will see what it sells for and use it as a learning tool. Its hard to know how far to pinch your margin, especially when things can go wrong/cost more than you think.
That's true, it's not uncommon for bidding wars to bring up the price above what it otherwise should have sold for. Indeed, some agents even list properties below market to induce a bidding war (at least in hot markets)
- 2yPat LulewiczBusiness MemberRealtor · Raleigh NC and Greensboro, NC · Member since 2019 · 394 posts · 392 votes
If your numbers are spot on, I would have felt comfortable around $105k in my markets. Remmeber that your first (couple) deals are great ways to make money but more importantly to learn. If you did this project and ended up going $10k over budget to where you didn't make a crazy amount of money, chalk it up to education U and right-size for the next deal where you have better data points.
- Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes2y
Hey @Jordan A.,
You'll have to get used to having those offers rejected, especially since you're just starting out. You must be super conservative with your numbers. As a former flipper, my advice is to never bend your numbers because of the fear of missing out. Be patient, make offers consistently, and you'll land your first deal sooner rather than later.
Best of luck!
Quote from @Pat Lulewicz:
If your numbers are spot on, I would have felt comfortable around $105k in my markets. Remmeber that your first (couple) deals are great ways to make money but more importantly to learn. If you did this project and ended up going $10k over budget to where you didn't make a crazy amount of money, chalk it up to education U and right-size for the next deal where you have better data points.
I was wondering if maybe we should have at least gone to $100k, so that's good to know. I am using formulas found on BP and I understand they're just a baseline but it will take some time to learn how to squeeze those numbers depending on the deal.
Quote from @David Ramirez:
Hey @Jordan A.,
You'll have to get used to having those offers rejected, especially since you're just starting out. You must be super conservative with your numbers. As a former flipper, my advice is to never bend your numbers because of the fear of missing out. Be patient, make offers consistently, and you'll land your first deal sooner rather than later.
Best of luck!
I agree 100%. Part of the reason for not increasing our offer on this deal was because the agent put a clock on it and I didn't feel like it was wise to rush our first one. Especially since we were still trying to nail down how we were going to finance it. We plan on having those details ironed out before the next offer.
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
If you are flipping it, an inspection is a moot point. You'll be replacing everything anyways. You'll never get an offer accepted on a house that's in the condition that it should be flipped.
District Invest Group545 Reviews Quote from @Bob S.:
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
My business partner and I have been in construction for over 10 years, so we did our own quick analysis of the property. My main reason for having an inspection period was so I could take a closer look at things like the AC ducts/crawl space underneath because it was pouring down rain the day we saw it. Curious though, are most investors closing deals with no inspection period? We have only closed on personal homes at this point and are used to having that period.
Quote from @Jordan A.:
Quote from @Bob S.:
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
My business partner and I have been in construction for over 10 years, so we did our own quick analysis of the property. My main reason for having an inspection period was so I could take a closer look at things like the AC ducts/crawl space underneath because it was pouring down rain the day we saw it. Curious though, are most investors closing deals with no inspection period? We have only closed on personal homes at this point and are used to having that period.
I have never hired an inspection go . Being that your in the biz you should not waste the 450 bux.,
Jordan this is not a good deal. maybe there is 20k less cap gains, not worth it.
All the best to you
Quote from @Bob S.:
Quote from @Jordan A.:
Quote from @Bob S.:
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
My business partner and I have been in construction for over 10 years, so we did our own quick analysis of the property. My main reason for having an inspection period was so I could take a closer look at things like the AC ducts/crawl space underneath because it was pouring down rain the day we saw it. Curious though, are most investors closing deals with no inspection period? We have only closed on personal homes at this point and are used to having that period.
I have never hired an inspection go . Being that your in the biz you should not waste the 450 bux.,
Jordan this is not a good deal. maybe there is 20k less cap gains, not worth it.
All the best to you
Appreciate the honesty Bob!
- Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes2y
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Quote from @Jordan A.:
Quote from @Bob S.:
Quote from @Jordan A.:
Quote from @Bob S.:
Sorry but this is terrible, should be all in 130K MAAX, 5 DAY inspection ? What are you doing? You and your GC should do this in about 20 minutes. PLEASE connect with someone in your area doing deals, Learn then go on your own. Do NOT buy this based on your numbers. This could very easily be a loss or just a waste of time, well not a waste you will learn what not to do :)
All the best
My business partner and I have been in construction for over 10 years, so we did our own quick analysis of the property. My main reason for having an inspection period was so I could take a closer look at things like the AC ducts/crawl space underneath because it was pouring down rain the day we saw it. Curious though, are most investors closing deals with no inspection period? We have only closed on personal homes at this point and are used to having that period.
I have never hired an inspection go . Being that your in the biz you should not waste the 450 bux.,
Jordan this is not a good deal. maybe there is 20k less cap gains, not worth it.
All the best to you
Appreciate the honesty Bob!
AS you see I am very direct, I will tell you what you need to hear vs want. Glad you have thick skin :) DO NOT do this deal unless you can get it for 20k less.
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
walk away, to tight, I said my peace, my conscious is clear LOL,
Quote from @Bob S.:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
walk away, to tight, I said my peace, my conscious is clear LOL,
Don't worry. There were several offers over asking when my agent called so we never even bothered sending an official offer.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
- That’s correct. And I think I rounded up a bit to be safe.
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
Quote from @Andrew Syrios:
Quote from @Jordan A.:
Quote from @Kevin Sobilo:
Quote from @Bob S.:
Guys how can any of you say this is a decent deal? ALL IN 160k, one mistake on reno bam profit gone, maybe a loss. Fee to sell house, there is no money in this, way to tight. NOT a good deal,
I think taxes they listed was superfluous. If they mean property taxes then its factored into closing costs/holding costs. So, I think they were looking at $148k all in plus their costs to sell (commission etc).
So, a projected profit of maybe $24k or so. I think they felt that was sufficient but wouldn't offer any higher and to me that makes sense.
Yes, this is where our heads were at. It didn't leave much room for error, but given the condition of the house I wasn't too worried about getting upside down in it at $90k.
Aren't the $12k listed for closing costs mostly for the sales side? (i.e. commissions and what not.) In that case, assuming your numbers are right (big if), you'd be looking at a $37,000 profit. A bit tight but hardly terrible. (I should note that I put whatever taxes we'd need to pay in the holding costs so I may have your numbers a bit confused.)
160k all in IF all goes perfect. Hope to sell for 180k, terrible. not including the 3% fee, terrible
Join the conversationCreate a free account to reply, vote on answers and follow this thread.