Hey!
I’m a new bird-dog and was wondering does anyone have a quick formula I can use to tell if a deal is good or not?
Thanks ;D
Howdy Lady Bird-Dog:
What is a good deal? This depends on several factors. What is the exit strategy? Are you buying to hold or to rehab and sell? If buying to hold you may want newer properties in good shape that are rented or you may want to fix up older buildings. Also a good deal may be just the financing. I paid retail for 4 duplexes but got then with owner financing and less than 5% down.
If you are buying to rehab and using hard money you should be at 70% of the after repaired value including all your hard costs, the purchase price, rehab costs and closing costs to purchase. I even add 4 or 5 months carrying costs to this equation.
You can pay more if you have cheaper funds or in a hotter market and if you do not have to use Realtors to sell the property.