Bank owned property

[Aaron Breiding]

I've have located a decent bank owned property. It's listed at $64k in a good neighborhood. Is there a "rule of thumb" when making an offer to a bank? Obviously it is a foreclosure and they want to get the property off of their hands without losing money. Any advice would be great. 

Thanks,

Aaron

[Steve Kordish]

Originally posted by @Aaron Breiding:

I've have located a decent bank owned property. It's listed at $64k in a good neighborhood. Is there a "rule of thumb" when making an offer to a bank? Obviously it is a foreclosure and they want to get the property off of their hands without losing money. Any advice would be great. 

Thanks,

Aaron

 Aaron, looks we're two of the newer kids on the block, welcome! 

My first and only two flips were both bank owned  - both this year. I looked at it this way... #1 What is fair market value after rehab? #2 What do I project the rehab and other expenses to be between purchase and sale? (then add 10% for overages.  #3 I subtracted #2 from #1 (which would be basically my break even figure on the deal).  #4 I multiplied that figure by .7 ( 30% +/- profit). That gave me my $$ I had to get the approval for.  If the bank had rejected that offer I was prepared to walk simply because I was using my own "rule of thumb" of wanting to make 30% - and no less!

I have no idea if my thinking was on track, but all I can say is both homes netted me over 30%. I guess what I'm trying to say is, I don't know if there is a rule of thumb in making an offer other than the one you impose on yourself and expected profit. You make your bottom line offer and if they say "no", move on.

Lust learned about BP 2 days ago, wish I had this resource in January cause all this is Greek to me ( no offense to my Mediterranean friends ;)

Best of luck!!!