NEWBIE FIRST DEAL MOTIVATED SELLERS 3BEDROOM 1 1/2BATH 1 CAR GARAGE WITH A 1 ARCE LOT NEXT DOOR ASKING PRICE 70K NEEDWORK DONE ARV 129K IS THIS A GOOD DEAL. PLAN TO WHOLESALE DOES THIS SOUND LIKE A GOOD DEAL
im a newby with 3 deals under his belt (lol) but here’s my 2 cents:
formula is ARV $129,000 X .7 = 90,300, (find out how much in repair$ is needed) -$15,000, (your profit) -$5000, and your purchase price cannot be more than $70,300.
i would still try to negotiate the price down, you dont know how much in repairs is needed right? also you can check on Trulia to see what the recent sales are for that area. the lowest sales are often rehabbers/investors. that will show you what the investors are paying in that area.
In our market we like that deal around 50k but not to say 70k doesnt work. if the numbers are accurate and you have a solid buyers list, it could move.
What is the story behind the 1 acre lot next door? Is it municipal sewage or septic? What is it worth if you sell the lot separately from the house or keep the house to rent out and sell the lot? What do vacant 1 acre lots go for in that neighbourhood?
I am not sure how the real estate market is in your area, but if the property needs work, I would not pay more than 50% of lowest of the market value. Also find out what the zoning restrictions are for the lot next door: can it be sold separate as residential? Commercial?
Regardless, run comps on the property and offer 50% or less of the lowest margin of the market value, so you have room for errors in estimate or price adjustments.
Zillow is completely unreliable and dangerous. Zillow is a toy, not a tool.
If someone used the term “zillow” to support his numbers, I immediately know that the person is either incompetent or has a turd to sell me. Either way, I run away.
Verify Trulia’s numbers with actual closed comps from the MLS, or a title company, or subscribe to corelogic. If the average comps are at $83k and not $129k, then your formula looks like this…
$83,000 less 30% or -$24,900, less -$15,000 for repairs, less -$5,000 for fee, equals $38,100 (aka the most you can pay).
So, the most you can pay and make a $5k referral fee is $38,100 for this property IF the comps reflect an ARV of $83,000.