Hello Rei Members,
My name is Sheila,I live in nc,close to hickory and charlotte.Im a new investor and Im ready to go to work.I have been through coaching courses and studies of all kinds.Research has been my middle name for the last several several months. I have found properties of all sizes and prices all of which are profitable. Ive done my homework and now need to share the profits.I am looking for a second opinion from a experienced lender. Will you give your advice ( I can take it).
First Property:Well maintained brick home
2 bedroom,3 bath.single family home.
SQ.FT. 1,972 Partially finished basement.
Fenced back yard, rent in area $650. to $1000. mo.
DOM:65, Very low crime rate area.
Taxable Value: $126,900.00
Epprasial: $171,837.00
Zillow: $134,500.00
Cyberhomes: $111,005.00
ARV:(lets say) $120,000.00
-30% : $40,000.00
= 70% : $80,000.00
Rehab: $20,000.00
HMP: $4,000.00
Max offer: $56,000.00
LP: $49,900.00
Median home values in area $215,000.00
GOOD MONEY AT 50/50 split .
Whats your opinion???
Rehab is high for what only need to be done.
This is a foreclosure. Need funding to get started.
Thanks for your advice. Many more where this comes from.
Hi,
It sounds like you have been working hard to learn and understand real estate investing!
First thing I see is to try to find 3 bedroom minimum homes as it is much harder to sell a 2 bedroom and if you can 1.5 or 1.75 or 2 bath is better than a 1 bath home and more desireable.
I take it the 1972 sq.ft. is main floor and basement? Always highlight finished square footage as price reflects livable square footage.
$650 to $1000 is a large rental spread, try to reflect the actual rental market for your subject property. 2 bedroom / 3 bath! (Is it 3 bath or 2.75 bath? Be precise.)
Is 65 days on market for this home or average days on market for a neighborhood?
Taxable value means very little, it could reflect 2006 assessed value which may show the assessed value has not been re-adjusted or it may show an aggressive assessment of value! For us as investors the tax assessment is not a good reflexion of current value!
The Eppraisal, Zillow and CyberHomes is not a good reflexion of value to present to a investor to solicite an investment, you and I can use these resources as a personal judgement as to whether we would continue to crunch numbers, but for official presentations always use at least 3 comparable sales (MLS) ideally within 1/4 mile and less than 3 months old, but if 3 don’t exist then grab from 1/2 mile and less than 3 months or 1 mile and less than 3 months!
ARV (After Repair Value) is a factual number!
If FMV IS:
$120,000.00
$40,000.00 Iis 33.33% of FMV
$80.000.00 Is 66.66% of FMV
Be precise in numbers and percentages as being incorrect is a sign to a would be investor that you can not calculate cost’s correctly and may have a problem understanding math!
I take it HMP is Hard Money Person (Hard Money Lender), there is a calculated correct cost with an interest rate and points if any or minimum term calculated in precise numbers! Then there are overhead cost’s which include all the utilities, insurance and taxes along with incidentals like lawn care!
$120k FMV
<$56K> Max. offer?
<$1200> closing cost’s
<$20k> Rehab
<$6k> Carrying cost’s? ($45K HM @ 18% with $325 month overhead for 6 months = $1k month)
<$10k> Re-sale cost! (6% listing and 2.5% closing cost’s estimated)
$27k potential profit on full priced offer?
This requires $40k from an investor assuming 20% down on purchase for hard money?
This is predicated on your value estimate being correct and $20k rehab estimate being correct?
Good luck,
GR
I got it. And it doesnt pay to rough estimate it. I have gone through it I see how I have listed my notes. I have been taught HMP is hard money points and DOM is the days home has been on the market.I know there are things I didnt make clear, Ill work on that.
Also thought it would give an idea of what the home could be worth after repairs by using the estimates. I got it on that too! Theres also a difference on the percentages to resell , and 6100. between the max offer and the list price. I understand what youre saying. I asure you I will work on this.I thank you for your info, everytime. I want to get it right, I love this work!!