While I have yet to put a property under contract yet because I want to develop my cash buyers list a little further, I'm skeptical to know when evaluating properties how do you know you're getting a good deal? I heard that I should be looking 30% below ARV but I'm curious to see what you all think.
Hi Claire, it's all about the numbers - they are what tells the tale on whether it's a good deal or not. The investor who buys your property should have a 30% equity position in it (or better) after all repairs, acquisition, and financing costs are taken into account. If you can find deals like that, you'll likely find plenty of investors willing to buy your deals.
The numbers don't lie. Be conservative with your figures and do your due diligence. Don't let your emotions get the best of you, just because it looks nice doesn't mean is a good deal. Trust the numbers.
A deal is based on two things....numbers and strategies. You may find a property that will give you 18% equity but that obviously won't work for a flip. However, if the seller will entertain leaving existing financing in place or owner financing the property, it could be a great deal for buy/hold/sell later, wrapping, etc.
If you're focused on a single investment strategy, you're leaving a lot of money on the table.
Sometimes i offer 65% - repairs..don't forget to minus the repairs. The percentage to ARV is based on what you are experiencing with other investors in your area. I am not speaking about your city..some pockets of the city have a higher percentage - repairs.
You can get real estate wrong, make mistakes, not know everything, not know every strategy, etc..
just keep going..None of us knew everything when we began and we keep learning everyday. We still don't. After the crash we almost have to revamp our real estate business to fit the new change almost annually now.
Just make offers at what you feel is right based on ARV-Repairs, or reach out to any of us and we can help you with the evaluation.
You don't have to have a perfect buyers list.
What is important like everyone said is the numbers..Get the right Seller for the right strike price for the right conditioned property and you will be continuing on an ever infolding journey of real estate.
Happy Successful Investing!
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