Why I'm Pretty Sure This Deal is Over
Don't get me wrong, I want this house but I'm pretty sure my offer will not be accepted. Here's the deal:
Seller is asking 68k for a 3/1 ranch style in a decent area of Richmond Va. I don't see how this place can get financing, it's in pretty rough shape so the deal has to be cash, thus my competition are other investors. ARV maxes out at 105k but realistically is in the 90 - 95 range. I estimated repair costs at 20 - 25k. Using the 70% rule brings me to 28 - 33k. I thought that a little low considering they want 68. So I offered 35k cash with a quick closing.
They have a few offers already so I'm waiting for the obligatory "best and final" notification from my realtor. Richmond is thick with investors these days, lots coming from further north where deal flow is drying up. Many are rookies and are so eager to cut a deal they are making the mistake of buying too high while also underestimating the repair costs. I suspect that is what may happen here.
So what's the answer? How do I build my business in an area I know and like to work in (I'm a licensed contractor)? How do I avoid competing with the deal cutters and slash and burn type investors? I think the best answer is I can't, fully. There's always going to be competition. But I'm starting to wonder if using the MLS to find deals is the most effective strategy. It takes a lot of time to keep up on the listings, go and see the properties, run the numbers and submit an offer quick.
I think it's time to develop a marketing plan.