Good deal or not?

Hi everyone.

This is my 1st post. I’ve been doing lots of reading here and gotten lots of valuable information.
This is the info on the website where I found the house.
What questions should I be asking the seller.

ARV 89-105k (area comps 85-100K)
Needs 20-25k repairs
Asking 39,900.00

2-story 3195 sq. ft. sfh
in an area downtown where revitalization is taking place and high end condos are going up.

I’m thinking offer 34,900.00
But I’m really clueless. This would be my 1st deal. Also, I’m concerned about getting the contract right so I don’t get stuck if I can’t find a buyer. I’ve been in touch with about 10 local investors so hopefully I won’t have trouble assigning it or doing a double close.

I’d definitely appreciate any feedback.

As a rule of thumb, and keep in mind there is no rule that works all the time, investors consider a deal 70% ARV - repairs. In your example 70% 89K - $25K is $37,300. That’s what a rehabber would be looking to pay. Assuming the area is good and the house will sell easily when complete.

Just to be safe you should shoot to be able to offer it for $35,000 or less which means you need to subtract your profit from and that determines your maximum offer.

I look at the value without considering the “After Repair Value”

I believe you should buy at it’s current value minus whatever discount your business model calls for.

currently the market says it isnt worth 39,000 or it would already have been sold … Therefore if you think it is worth 35000 then make an offer at 70% of that number… or 24500.00. Keep in mind that you should always have a “Minimum” amount that you are making on each transaction to cover consistant cost of each transaction…

You need to be making money every step of the way and not count on repairs bringing in the “Profit”

Good Luck

Michael Quarles