All Forum Posts by: Account Closed

each estimate I put together typically ends up closer to the 64% ARV- repairs when actually detailing out the cost and a reasonable profit margin.

seems like the 70% doesnt even get you $10k net profit after short term capital gains on any property less than $200k ARV. And by the time from the house being under initial contract all the way to finally selling the thing.... months of time and hassle, although costs should be accounted for its still allot of unnecessary risk and time spent with a house on your mind for not much reward.

instead of using a 70% rule, do a detailed estimate on the big array of holding costs associated with inquiring and holding and selling a property, that will give you an idea of what would be reasonable for a cash buyer to need as motivation to pull the trigger. I will tell you 10 or 15k will never be it for me... rather get a part time job then risk years of cash building for a reward i could get just by working those few months and not risk $$$$$$. 

@Brandon M.

just thought i would update. so I got a call from the sellers agent today. says seller is "still too emotionally attached to the home", he said he thought the offer was reasonable based on the amount of work needed. He made the comment that it sounded like she may come down to 35k possibly. I told him that the closer I got to 30K the harder it was to make the numbers work on paper so I would call him and touch base in a month or so. 

So I found another house, also inherited from family so no mortgage, same neighborhood, same price actually (45k) also needs work but not quite as much. after researching I made a walk through appt. set for tomorrow. I did a preliminary estimate and Im assuming I can offer somewhere between 28k to 33k after the walk through and I confirm/change the estimate. the seller has been dropping price every 20 days by about 4% so this makes me think they are motivated. the last house they never dropped price. on this house I talked to the sellers agent and he said they are difinitly motivated to sell and to make an offer, he said the seller told him to "get it sold." I told him to bring a purchase agreement with him and I will do a written offer at the end of the walkthrough. 

i wonder if its a stigma of offering anything in the 20's when they are listing in the 40's? maybe if i can offer 30k instead of 29k than that would get over that round number stigma for the seller?

Im kinda doing this also as an experiment also to see how much I can get off the list price of a house.... I would think if i offer substantially low on 10 (assuming i can make the numbers work) or so houses surely 1 has to bite.

I offered 26k without any contingency and a $2,500 earnest deposit. 

home needed more work than I anticipated, im estimating the repairs around 27k. The free rent part didnt make it into the offer but I did bring it up to the sellers agent which was who i made the offer through. I gave them till this Friday 5pm to respond. I debated on giving them even longer, such as a week or two just to indicate that im not concerned that higher offers will come in the mean time. I could still do that when/if they counter

 slum lord of the year... LOL. i will have to remember that one

Thanks for the comment Brandon. I really want the house because of the location, awesome strip of craft brewery bars and restaurants... I even have allot of friends that would wanna rent it

but im looking at it as a long term rental and i just cant get the numbers to work with a purchase price much above 30k based on comparable house size/rents & renovation costs. I really cant think of anything else that a buyer can offer other than some free rent...

heres what im looking at:

-house listed @ $45,000

-on market for 60 days

- i want to offer 28k-31k cash, no financing or inspection contingencies other than the walk through im gonna do this evening. i intend to hand over the offer to the selling agent at the walk through.

- blue collar area however within walking distance to a nice upcoming entertainment district highly sought after by people my age ( mid 20's)

-needs a good amount of work (something i do myself and enjoy) and someone seeking a mortgage likely wouldnt qualify due to current condition so this is pretty much investors only.  current owner inherited the property and is living in it, looking to sell to move closer to their work on the other side of the city ( according to selling agent). I do not use buyers agents as i prefer to do my own negotiations, and since sellers agents have a bigger monetary interest of getting the deal done ( they dont have to split the commission)

 im going to assume the seller wont easily consider my offer it due to it being too low even though the sellers agent said he has only had 1 other person walk through the house so far. what if i offer to let him stay in the house for up to 3 months rent free after the sale so he is not rushed to find a place? cost would be low for me, taxes and insurance are pretty minimal.

anyone else ever offer to let the seller stay in the house for a bit free of rent as an incentive to sell? maybe i could offer to help him move when the time comes? may sound dumb but anything else that I can offer other than money?

@Jay Hinrichs  , just wanted to confirm that, you will make the cashiers check out to the owner? not a title company? i realize you said you put it back in your acct after but just wanted to ask on that. 

(fyi properties that im doing these offers on average in the 50k & lower range, good areas but houses that need allot of work (something i enjoy) so they have been on the market for a pretty long time, a buyer with financing likely wouldnt be able to get a loan on them due to condition, so im not dealing with huge sums)

@Jesse Waters  my theory that if I offer on houses I like which have been on the market for 6 months or more (some of them over a year) than some sellers may be happy to simply see any offer at all even if its 60% of asking in some cases. I look up the houses on the assessor to see how long they have owned it or if it was something they inhareted/transfered from a trust. this way im only offering on houses that are likely owned outright so there is no minimum amount they must get in order to pay off a mortgage.This method/theory requires a high amount of offers going out to see any success. 

@Jesse Waters  @John Thedford 

I really like the idea of including a large earnest deposit such as 10% or more but could you explain that further?  do you actually give the sellers agent a check or a copy of a check? do you already have an escrow company that you intend to use in mind with the check made out to them? 

to be clear, i have the funds to do this but want to be cautious with handing out checks or cashiers checks for 5k or 10k, and my intent is to offer on multiple properties. 

also, going back to wanting to keep the process as quick as possible regarding making the offers would this work?: get a cashiers check for 10k made out to an escrow company I pre-choose and include a copy of it with the offer and a proof of funds showing I am not seeking financing? ....just not that comfortable handing out large checks for funds that have taken me years of saving so if im going to than I just want everything to be clear

Thank you guys for your responses. @Mitch Coluzzi @Dell Schlabach 

I think i will make up a bunch of prefilled out offer letters so i just need to put in the property and price along with proof of funds. I prefer not to have an agent honestly, I prefer to do all negotiating myself and deal directly with the seller or sellers agent myself. 

simple idea of having a bunch of the paperwork already made up and filled out that way.

@Chris K.  thanks for the input, i like your quote also " sweat equity is the best startup capital" that pretty much describes how i got myself to this point of being able to actually be an "investor" finally.

I think what has kept me slow on making offers is the pain in the butt long drawn out ordeal of writing it up. most the houses I offer on are on the MLS so im basically making my offer to the agent, verbal or written.

do sellers agents take verbal offers seriously? through a good discussion I feel they understand that I am an investor and am serious and that my offer has no contingencies but havent had any call backs (and im talking about 7 properties ive done this to). I make them verbally allot of the time but I wonder if it would hold more weight if I send a written offer? could I just email the agent a genaric offer letter similar to what BP forms are available, obvously it would have property specific and $ specific information on it, but I wouldnt include all the signed disclosures bla bla paperwork that goes with buying a house. would this work? it would make it much easier and I could offer on multiple properties in a much smaller amount of time. this way i wouldnt have to sit down with the sellers agent and go through the motions since my offers I anticipate will be more of a numbers game (allot of offers before one lands)