60% of as is value?

I keep hearing gurus saying they’re ideal deal would be 60% of the as is value BS Ive been in this business 6 years and have probably looked at a million houses LITTERALY and I have yet to understand this concept.If a home is listed for $54k AS IS and the retail value is $90k .This type of property is usually found in REO listings Hud listings or Wholesale listings.now HOw in the world are you going to convince one of these listers to accept $32k for that piecs.Lord knows Ive asked in offers for this to happen and have been laughed at ;DI dont embarres easy. But I have never seen one of these deals EVER happen and after talking to thousands and thousands of investors from all over the country I have yet to hear about a deal happening at 60 % of the as is value.My bitterness is IM sure it has happened to some one some where in the world but I dont think the guru’s should use these misleading examples as though they are the norm giving people false hopes.

Sales ability…beef up your library. :wink:
Sorry for the seemingly curt answer…it wasn’t intended as such.

Exactomundo David. People think when I talk about learning sales they have the “used car saleman” picture. But the truth is when you’re up against a really good salesman you don’t even know you’re being sold.

They say 60%-80% of the ARV minus repair costs not the AS IS. I have not seen anyone recommending 60% of AS IS.

Isn’t ARV less repair costs the same amount AS-IS? Seems 6 of one/half dozen of another…

An investor I’m working with just closed on a house for 69k and it was appraised for 215k so thats around 45% FMV.
I guess it just depends on their motivation level, what they need and how well you make your solution sound. (Too bad it wasn’t me that found it!)

AS-IS is just that, what it is valued the way it stands right now.
ARV is what it “Will be” valued at after the repairs. This is also sometimes referred to as FMV

I have never heard of 60% of the “as-is” value.

The formula is “supposed” to be ARV or FMV - 70% (or whatever you want) - repairs, hold/closing cost etc = MAO (Max Allowable Offer)

Everyone feel free to correct me if I’m wrong!

I was interpreting the “AS IS” as the asking price rather than the ARV - repairs.

First, let’s talk about exit strategy. If I put a property under contract, one of two things is going to happen to it. If it’s in very poor shape or out of my “farm”, I’ll wholesale it to another investor for a quick cash profit. If this is the case, a “good deal” is a 1-3 unit building that I can get under contract for about 60% of its “as is” value.

This is a quote from Vena Jones Cox .Look to your left and near the top of your site navagation list you will see the word home .CLICK ON IT and then look to your right of the home page near the bottom (without scrolling ) under NEW ARTICLES click on “Whats the Best Way To FInd Deals”

Look at above post

She’s crazy

Just kidding. But I have never heard of someone offering that low of a price.

Maybe she is just saying those #'s to elimanate some of her competition…

ARV - repair cost isn’t the ‘as is’ price. If that were the case then you’re assuming that every dollar you spend in repairs is generating exactly 1 dollar of return. Since you’d have zero net return on your investment, why would you ever do the repairs? It’d be better to never repair anything because you’re not gaining anything by doing the repairs.

60% of ARV - repairs is still too low in my opinion. I think 70% of ARV-repairs leaves 20% of the final ARV for profit (figure 10% to sell the house as a worst case scenario) which should be plenty enough to do the deal. If you shoot for deals that are ‘overly’ profitable you’ll find you’re missing out on alot of good solid deals.

That being said your ‘repairs’ should be generating their own ‘return on investment’. That is you should only be doing repairs that will bring value to the house both in reduced marketing time and overall value to the sales price. So if your house is a $150k and you’re doing 15k in repairs then the .70 would be approximately $94k. It’s quite reasonable to get a deal for $94k. Consider that your vision, expertise, and ability to increase the ARV on only $15k are what seperates you from the average ‘investor’.