I've been absence from real estate for 2 years! Time just kept on moving on, 2 years passed so fast!
Anyways, I'm ready to get back in, but that first step is always scary. Need confirmation that this is a good deal, is it?
List $171k. Offer $140k, arv $220-235, repairs $30-50k. Will use hard money loan (65% LTV or 80% cost which ever is less)
Would appreciate all the help on this one.
How long will you have to hold it to complete the repairs?
If I am understanding this right (and I am new to this but getting better at deal analysis on paper) List $171k. Offer $140k, arv $220-235, repairs $30-50k
$220k low end ARV x .70 - high end repairs $50 = $104k
your offer is $36k more than your MAO (maximum allowable amount). Even if did the repairs on the low end ($220 low end ARV X .70 - low end repairs $30 = $120) you are still over $20k on the offer price. I am going off a higher ARV because you shouldn't invest with the hopes of appreciation (rule of thumb, it still could work).
Is my math correct on this or am I still missing something?
@Jeremy Pace , no more than 6 months (thinking, 3 months for repair works, and 3 months listing). Is that the average time?
@Dominique Grayson, Wow, seems like I would be offering at $120K to be on the safe side. I'm also overestimating the repair costs and underestimating the ARV as well (give myself wiggle room).
Thank you both for responding.
if you're going to hold it for 6 months, then make sure to remove 6 months worth of holding costs from your profit, or your estimate will not come very close to reality. Sorry can't get tags to come up on my phone.
those are good things to think about. Let us know what you end up doing!
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