Making an offer on a flip

4 Replies

I had a question on making an offer on a flip. I'm putting dummy numbers just for the purpose of the question, but please let me know if the numbers are wayy off. Let's say you get the house appraised for $300k and when you're close to make an offer, you realize you want to change the roof, which is not necessary. Let's say the roof will cost $80k. Do you simply take $80k out of the offer price or a portion of it, since ARV will likely be higher? Would love to hear your approach on how you would adjust your offer

Welcome @Ryan R. - First- assuming you are just truly using "dummy" numbers, but a roof shouldn't cost you anywhere near $80k. Secondly- a roof isn't really a "value add" meaning, a roof that doesn't leak does not really add to the ARV, people expect a roof to not leak. There's a difference between an upgrade or a perk that makes the property nicer and will command a higher ARV or rent. For example: formica countertops work just fine and they'll do the job- but, where appropriate, if you use quartz countertops, that will add value to the home because it's an upgrade.

Best of luck out there!

Originally posted by @Ryan R. :

I had a question on making an offer on a flip. I'm putting dummy numbers just for the purpose of the question, but please let me know if the numbers are wayy off. Let's say you get the house appraised for $300k and when you're close to make an offer, you realize you want to change the roof, which is not necessary. Let's say the roof will cost $80k. Do you simply take $80k out of the offer price or a portion of it, since ARV will likely be higher? Would love to hear your approach on how you would adjust your offer

First step is to educate yourself on the market and the business. There is a lot to the process of house flipping. To answer your question you need to determine the ARV and subtract all your renovation costs, all closing costs, carrying costs, etc. Then subtract your desired profit and that leaves you the offer price or what's referred to as MAO.