Calling all partners ! Hey guys, I lucked into my first deal and need some help constructing the offer. This is the story.
I’m an appraiser and I met a realtor that turned me onto a vacant house and the owner lives in California. I est. that the ARV is around $460k. The realtor said that the owner just wants an offer. The realtor originally said offer $350k, but with repairs and profit, I was thinking of about $250-$275. I figure it needs about $60-$75k in repairs including adding central air to the house, but nothing major, just a total make over inside and out, the house hasn’t been updated in 40 years, but doesn’t show any signs of any major issues. It has city water and sewer so there won’t be any hidden well or septic issues. I’d love to get some advice from someone that I can learn from and even be involved with a Mentor. Please let me know ASAP, I saw the house on Sat. and I don’t want it to slip away. Thanks.
Dave, take the repairs into consideration when making the offer. if you need an estimated 70k in repairs that will put you over 75%. Remember you have lots of fee’s when you both buy and when you sell. Your profits get eaten up very easy. :beer Good luck
PLEASE do not pay $350k!
First, make sure your “estimated” ARV is correct for that property, in that neighborhood, in this market for a fast sale. You need to be the best house on the market for the lowest price. Otherwise adjust accordingly for longer holding costs.
Other factors to consider include how long it will take you to finish the project? And where you are borrowing your money from…hard money is more expensive than private or bank money. Do you have a network of other investors in your area? If so, this may be the perfect situation to partner with an experienced investor.
Disclaimer that this is a very general rule…if you can buy it at less than 50%, you “should” be okay. Make an offer and see what they say.
Chris
Thanks Chris, I put in an offer for $270k and they said that they didn’t think that was high enough. Then I offered $285k with 40% being a note to the seller at intrest only and a 5 year bullit. They are considering it, but they like the $285k all cash, which may be too much because getting the money would be costly.
What about me settling on $285k and then wholesaling this one for $310k? It probably needs less than $70k in work and the market would fetch at least $450k. I may have to let this one go, but I do want to do my first deal some time in the next month. I may have to keep looking. Thanks for all the help. DAVE