Does the formula to buy apply to new homes too?

Rehabbing, Fix and Flip, Rental Properties
1

Hi there,

It is so happy to find you here, and give my greetings to you all :banana .

I am reading the posts. They are interesting and helpful, thanks you very much indeed.

From one of Stacy’s, it says the formula to buy is 70% of ARV minus repairs = purchase price, and I am wondering if this applies to new homes too.

I am new to the investment and about to buy a new home in Northwest Austin, and the deal dosen’t meet the ‘70% of ARV’ Buying Criteria :hammer .

2

Stacy’s rule is kind of universal when buying distressed real estate and reselling. It would not apply to property bought from the builder unless he is in distress. I am pretty much sure that you can get a good deal from builders such as low rates, buy downs, free upgrades but you will not see any at 70% of their value. If you do get me a dozen or two also. Hope i helped answer your question. I feel it is still agreat time to buy with rates still low and lots of inventory to choose from. We are also at the end of the best time of year and when it gets cold out there will also be even as good or better deals.

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737

512-301-9171 home
512-587-6177 mobile

3

Thanks a lot, Ted.

I will definitely get you ‘a dozen or two’ when I get 70% deal from builders, well, perhaps, we may target a builder for such a deal, ha, (have to find a builder who is in distress first, of course) :dance2 .

I guess you do more resale properties than new homes, don’t you?

Thanks again,
Tracey

4

I would not call them resales. I mainly buy wrecks that are totaled that are not livable. I did get a new house a couple of times. I built a 2500 sqft California style home here in Oak Hill in 1984 and recently a 3900 sqft Victorian with a wraparound porch. It appraised for $450,000 and it cost me $240,000 without the land which cost me $30,000 but appraised at $120,000 when i built in 2000. I should be building but there are a lot of homes for sale now and I am afraid to try. If I did finish one you could probably buy it for 75% of the value after I could not sell it. I am sticking with the east side and low income low mortgage payments until i get restablished financially

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737

512-301-9171 home
512-587-6177 mobile

5

Sure, Ted, let me know if you have one you want to sell for 75% of its value.

I am currently buying new homes or homes well kept like new, and mainly sticking with Northwest now. If you or anyone here have a good deal, please talk to me by this site or by email t_h_zhao@yahoo.com.

Thank you,
Tracey