# Resale Price: 204 Stanfield Cheyenne WY

11 Replies

Hi all -

I've put in a cash offer on this property:

for \$75,000 using this formula:

Max Purchase Price = Sales Price - Other Costs - Profit - Repair Costs

MPP = \$125,000 - \$10,000 - \$20,000 - \$20,000 = \$75000

All the details about the property are in this post:

My buyers agent informed me that my offer was not the first one the bank was negotiating with, and after that negotiation failed, the bank has now come back to me and counteroffered at the current asking price of \$104,900 (which they've just dropped \$5,000 from \$109,900).

I am questioning the resale price I am using in the formula, which was the lowest of these four:

• Selling agent's resale estimate: \$135,000 - \$140,000
• Buyers agent resale estimate: \$130,000
• Zestimate: \$125,000
• Trulia market value: \$130,503

I am in Australia, and am relying on outside sources for information. If anyone could provide a guesstimate of the resale value, I'd certainly appreciate it.

I'm also wondering if my profit of \$20,000 is unrealistic. I am calculating it as:

20% of (purchase price + repairs +other costs)

= 0.2 x (\$75,000 + \$20,000 + \$10,000)

= 0.2 x \$105,000

= \$20,000 (rounded to the nearest \$5000)

I've lost two other deals using this formula, and after that and looking every day for the past 6 months, I'm wondering if I need to reduce my profit goals in order to actually close a deal.

Rowdy

A \$20K profit on a \$125K fix and flip would be on the high end.

The bank could care less about you making a profit on the deal. They want to get as much for it as they can.

Do you have a team in place to do the fix and flip? I honesty can't fathom how you will manage that from Australia.

Hi Jon -

Thanks for the quick reply. What would you say (either in dollars or in percent) would be a realistic profit?

I have a relative there who will be managing the renovations and also the property once it's fixed up.

Rowdy

I agree with @Jon Holdman - \$20K probably isn't realistic. Also how are you estimating the repairs? If you don't have the person who is doing the work giving you the repair numbers, then you probably want to consider doing so. Also using "Zestimate" and Trulia numbers is a pretty bad place to start. Your agent probably has the closest estimate at 130K, but you also want to figure out how many days on market you should expect.

Hi Michael -

Thanks for the response. What do you think would be a realistic figure in either dollars or percent?

I have a relative in Cheyenne and another in Sheridan (who was a contractor for many years) who are helping me get an idea of repair costs, which I round to the next highest \$5000.

All the repairs which are needed are listed below.

I know Zillow and Trulia are not good sources - I only put them in to provide all the information I have.

Repairs:

• New shingles for roof. Current shingles do not meet standards needed to qualify for insurance.

• Doors and door frames

• Some windows

• Ceiling in basement

• Kitchen and bathroom floors (new tiles or laminate)

• LOTS of paint, indoor and outdoor

• All new kitchen appliances

• Some drywall repairs but nothing extensive

• Bathroom tile, shower, faucets, vanity

• All new light fixtures

• Some vent repairs and new vent covers.

• Possibly some new carpeting.

One other piece of information I should have put in my initial post is that I have to hold the property for at least 2 years due to laws around the retirement funds I'm purchasing the property with. So I'm thinking that I would hope to get 10% return per year, or 20% over two years. Sorry for not including that before!

@Rowdy B. Thanks for the PM, let me see if I can help some. First, even though I am in Wyoming this property is about 300 miles away so I am not up on local market conditions.

Generally Cheyenne has an upbeat market. It has a bit of an oil boom going on from Casper WY all the way down through Greeley. It is nothing like the Bakans, but it has stimulated the economy. So it would be reasonable to presume prices would be firm or grow over the next two years.

Cheyenne has a good job market and population seems to be growing.

The tax assessor has the market price of this house at just over \$130,000. They are reasonably accurate for value based on the outside of the property, if the inside is better or worse than the outside adjust price accordingly.

You appear to have about \$30K in costs, using that you could do the roof, the kitchen, a bathroom, and probably paint a good part of it. You forget that you will have a 6% realtor commission when you resale it, plus Title insurance closing agent fees, maybe some point concessions to the new Buyer, so lets say 8% of sales price. So you have to buy the place for \$90,000 just to break even, and not counting holding costs. If you are going to hold for 2 years you really need to get figures on rental income, management fees, mortgage costs, etc to figure out cash flow. If you cannot cashflow you are in real trouble.

You cannot really fix it up as a fix and flip as you will be renting and the property will not look like a property that was fixed up to sale.

The yard looks to be in horrible shape. it does not look like a candidate for a fix and flip.

Cheyenne is actually closer to @Mark Ferguson who is only 50 miles away in Greeley Colorado, or @Michelle Y. who lives in Cheyenne. Either of them could tell you more about local prices than I can.

I am about to fall asleep so I hope this makes sense. Good luck

@Jerry W. thanks for the mention, but I know nothing Nout he Helene market. @Michelle Y. Will be a better resource.

thanks @Jerry W. and @Mark Ferguson for the mention!

@Rowdy B. I PM'd you from the one you sent to me.

Wow - thanks so much for all the information!

@Jerry W, thanks for staying up so late to reply! I do appreciate the rough estimate of the rehab and for pointing out the extra costs involved with the sale. I have considered either renting it to someone who may be in a position in 2 years to purchase it, or doing some repairs now, move the tenant to another property in 2 years (hopefully I'll have another one by then), finish off the repairs and then sell it.

@Rowdy B. I don't have mls access in Wyoming so I don't have inside info. I did some advertising in Cheyenne to purchase property there direct from owners and researched a number of properties that I was offered. I also have some relatives that live there that we visit a few times a year. That location in my opinion is the worst in Cheyenne. It's near the interstate and on the northwest side of the highest point in Cheyenne. In short it's the windiest, coldest, noisiest, nastiest area to live in Cheyenne. It was my thought when I was offered a place in that area that \$130,000 would be about the top of the market.

You have a major rehab on your hands for a flip. If I was in your situation, I would only paint and carpet and update the appliances with nicer used before renting. The rest you would do when you are ready to sell.

I think you should shoot for the \$20K in profit because with your distance you are going to have a real hard time keeping a lid on your expenses.

I have a place in Cheyenne that I'm trying to rehab. It's been a real education. Everything costs 2X what I can get it for where I am now. I have not been able to find those in the trades that work inexpensively in order to keep busy. As @Jerry W. pointed out, the area is in a bit of a boom so there aren't too many contractor's looking for work. From what I've found your rehab budget would be light.

I think you should stick with your price, although I think it's a huge stretch that you have a chance to get it at your price. As long as someone can get a loan for the property, all the bank has to do is wait and they know that sooner or later someone will buy it retail. Probably sooner.

Hi @Bill S.

Thanks for the advice and the brutally honest opinion of the property's location. It certainly helps to know these sorts of things that real estate agents don't tell you about!

As for the price, I'm pretty certain that you're right about my chances. I've been looking pretty much every day for the past six months, and have only found three properties that were similar to this one, and lost out on the other two because of this sort of a situation - an owner/occupier came in at retail price. If this one doesn't happen, I'll keep trying!

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