So I have been doing tons of research, and I even watch a great webinar by Sean Terry. I'm highly motivated to find motivated sellers. I've been utilizing my Internet resources to find them. I notice a couple properties that could be possible leads. I inquired about several FSBO's and already received a quick response from one possible motivated seller. I've done research on the property and notice the home has 5500 in back taxes. I did a Lil research and the ARV is 50,000. The house needs a full rehab and that's estimated at 32,000. I wanted to come with an offer before I even talk to this guy since it's my first deal. Any advice on how to execute and continue the process. His is Asking For 21,000. I'm thinking more like 10,000 32 at the most . Any wisdom out there ???
Considering we know nothing about the property I would offer 5k and sell it 10k. Try to help him. Fix his problem.
@Erick Pough How did you come up with offering $10K. Just rough estimating based on your numbers here's what I get.
50K x 70% = 35K (using 70% rule of thumb)
35K - 32K = 3K (less repairs)
3K - 5.5K = -2.5K (less back taxes)
Thus using the 70% rule, you loose money. Even if you were to use a 75% rule, which in some areas of the country is where investors buy at, you still don't many any money on a wholesale deal and too little on a fix n flip.
@Erick Pough What I'm learning is that "not every deal is a deal "
I commend you on the action that you are taking. I'm finding that to
be the main challenge we newbies face. Good Luck out here !