What's the most I should pay for this property?

Question

Looking at buying a property in Jackson, MS as a cosmetic rehab and quick flip.  I have a very detailed quote for the work that needs to be done in the amount of $15K - 3 weeks time max.  Tax records for 2009 show true value of $168K.  End buyer already in place once rehab is complete.  How much should I expect to pay for closing costs on each end - purchase and then subsequent sale?  Auction site wants 10% of final bid price.  Applied for hard money.  Any other costs I may have missed - please advise.
          Link to the ad:
          [http://www.biggerpockets.com/properties/4475-jackson-ms-589-hanging-moss]

Will Barnard · Answer

If the ARV is $155k, and the expenses (with contingencies are $18k, then your max offer is %155k X 70% ($108.5k) minus $18k which equals $90,500
Expect to make around 15% of ARV if you know what you are doing, 10% should be minimum.
I don't do money invested flips unless I can make at least $20k

Account Closed · Answer

Thanks Will.  I agree with you on this.  REOs and short sales are where I have looked.  I am primarily focusing on Commercial Real estate at this time but am also looking for a few good flips to bring in some money NOW.  Thanks all for your detailed responses.  I appreciate it very much.

Account Closed · Answer

Thanks Shaun.  I like your site.  I'm bookmarking it and reading it all!

Account Closed · Answer

Will -

Thanks.  I think you just answered this for me.  Not enough money here to mess with hard money & the unknown.  Even though the bidding on the house starts at $52K, I know the seller has $90K into it and he has lots of interest in the house.  A cash buyer would work better in this deal.  I will keep your formula and use it in the future.  Thanks again.

Lisa

Account Closed · Answer

Thanks Scott for your input. I need to see some real comps.  I would hope to get $30K or more out of it or it's not worth it.  Seller says end buyer is pre-approved but he only wants it after rehab - so he's not interested in buying and doing the work himself.

Account Closed · Answer

Thanks for your responses.  Eppraisal.com shows a range of $172-232K.  So just for the sake of example, let's go conservative and say the house is worth the $168K I used before.  Let's also discount selling price below market for a quicker sale in case in place end buyer flakes.  So let's sell it for $155K.  Now what do you think?

Brian Haskins · Answer

Contact your title company or attorney to get you the cost of closing.

Brian Haskins

Richard J. · Answer

another reliable source for values is Fidelity National Title Passport, I believe that you have to be a licensed agent for access or maybe as an individual that brings them business? not sure about that.  Since we are licensed and do business with them, we have CONVENIENT, ACCURATE access to ALL recorded RE TRANSACTIONS.  Find a Realtor that is HONEST to work with.  Years on the job is not the same thing as HONEST, and also ALL the bells and whistles on the business card is not necessarily HONEST, being a member of your church is not necessarily HONEST, being the Top Listing Agent is not necessarily Honest!  Honest is when they tell you the truth 100% of the time, even when they will lose some money or a listing, a sale, etc.  Good Luck! --- Dawn

Shaun Steckler · Answer

You need to focus your acquisition efforts on pre-foreclosures.

In many cases you're too late when the property gets to the courthouse steps.

When you're buying something like real estate, you want to be the only person in line.

Interest from other people always drives up the price.

What's the most I should pay for this property?

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