How does these numbers work?

5 Replies

I went to see a house today that I plan on wholesale, the guy has his friend renovating the place (its not occupied) 

-The guy thats renovating says estimates are about $10k remaining repairs

-The homeowner says he owns the bank $280k

-Also says based on tax accessor is $370k (we all know thats an estimate)

-His asking price is $400k

As far as the ARV I'm going to check Agentpro247.com it does show comps that sold.

All advice or insight is gladly appreciated.

My instinct tells me to NEVER pay more for a property than Tax assessment (mainly because there are oodles of properties available for LESS than Tax assessment - then you can apply for a lower assessment later if that unduly affects your outgoings). Also, will banks ever lend MORE than Tax assessed amount? Are you saying that you already have Buyer/s lined up that would jump on the chance of buying it for MORE than $400k? (If so, kudos. If not, WARNING!!!)! It seems to me that the numbers are just too far out for you to even bother with an Offer in the same ball park. Are the comps even relevant to that PARTICULAR property? Realistic ROI to present to your buyer? Would YOU buy it for that price using borrowed funds? My theory is that if it doesn't make good investment sense to fully funded with borrowings, then it doesn't make investment sense as ANY sort of deal! Cheers...

Originally posted by @Brent Coombs :

My instinct tells me to NEVER pay more for a property than Tax assessment (mainly because there are oodles of properties available for LESS than Tax assessment - then you can apply for a lower assessment later if that unduly affects your outgoings). Also, will banks ever lend MORE than Tax assessed amount? Are you saying that you already have Buyer/s lined up that would jump on the chance of buying it for MORE than $400k? (If so, kudos. If not, WARNING!!!)! It seems to me that the numbers are just too far out for you to even bother with an Offer in the same ball park. Are the comps even relevant to that PARTICULAR property? Realistic ROI to present to your buyer? Would YOU buy it for that price using borrowed funds? My theory is that if it doesn't make good investment sense to fully funded with borrowings, then it doesn't make investment sense as ANY sort of deal! Cheers...

I'm not saying I do have buyers willing to pay 400k for this property. My MAO is $192.000. That plugged in with his figures might not work but I'll still offer. I would buy it for that discounted price and yes, i've checked the comps which I got the arv of $303,416

Good luck with offering the seller say, $175k for a property that he is asking $400k for. Yes, that is how good deals can be sought, but make sure you have all your ducks lined up for your exit strategy. My concern is that "the homeowner says he owns the bank $280k", which effectively means that the BANK owns the home - and I don't see them agreeing to a ~$100k mortgage loss! And, I wouldn't bother with a seller who tries to get more than ARV in the first place...

Originally posted by @Brent Coombs :

Good luck with offering the seller say, $175k for a property that he is asking $400k for. Yes, that is how good deals can be sought, but make sure you have all your ducks lined up for your exit strategy. My concern is that "the homeowner says he owns the bank $280k", which effectively means that the BANK owns the home - and I don't see them agreeing to a ~$100k mortgage loss! And, I wouldn't bother with a seller who tries to get more than ARV in the first place...

Understand where you're coming from. Thanks for your thoughts as they put things in prospective.

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