I just want to run the numbers to everyone and see if this is a good deal or not.
Repairs: 25K-30K 115K x 70% = 80.5K - 27.5K =
Purchase price: 55K 53K - 5K fee = 48K MAO
Assignment fee: 5K
I know this isn't exactly the 70% rule but it is pretty close and that is the price the seller verbally agreed upon. Is this too small of a margin for someone willing to flip or is that normal when purchasing in a lower price range? Also would a buy and hold investor require less of a spread since equity and sales price wouldn't be as big of a factor to them?
Also note that I am inexperienced with estimating repairs which is my biggest concern currently. It could be more or it could be less than the 20-30k. I tried to estimate generously to give some fudge factor.
Also, to clarify, I would be offering 50K for the property plus the 5K fee so the rehabber would be into it for 55K.
That sounds pretty good and very similar to a deal I did a couple weeks ago. I think that's a solid offer and should be a good deal. It's always good to give a little cushion on the repair costs as well. Lock it up and get a deal! Good luck
@Christopher Salazar Thanks for your input!
I actually got the deal under contract last night and I was able to negotiate it for $48K!!
Now I just have to secure a Buyer for the property. It is pretty exciting but also a little nerve wracking since this is my first deal but I have already learned so much just from going through this process. I am just thankful I actually decided to put the books down and take some action!
Yeah man that's awesome! By taking action now, you're ahead of so many others who just sit trying to learn for years. It's great that you're putting it to practice. Best of luck assigning the contract and make sure to post a success story once you close this one!
How did this deal go?? Did you find a buyer? I'm interested in hearing the end result.