I did my own comps on 4805 Southold St. Orlando, FL 32808.
I got five properties within 1/4 mile and 90 days.
I took off the top and bottom number and got an average of 90.84/sq. ft.
This house is 1,364 square feet, so that gave me $123,910.
I posted a job ad on Craigslist (not a free ad, but one I had to pay for).
A realtor came back and told me I could get $180,000 - $190,000 for it depending on what I did to it.
I would love to believe his numbers.
What should I believe?
Just a real quick search and I’d say yours are closer to a realistic value. Sure there were a couple that sold that were in the 180K range, but the vast majority were under $140K.
I read his wrong, he said $150.
She says the house needs no major repairs. Does that mean I should put $0 in the formula? I’m assuming the rehabber would at least want to do SOMETHING. New paint job, etc.
http://mfr.mlsmatrix.com/Matrix/p?ID=12691004322
That’s what he gave me.
So if it’s $150,000, I should do $150,000 * .7 - $5,000 = $100,000
Then $0 for repairs? Or should I throw in a few thousand just for good measure?
When a homeowner says it needs no major repairs that means it’s livable but will need 40K in updating. It was built in 1962, it has the original pink tile work in kitchen and bath, it has the original steel framed crank windows, it has a swamp cooler and a floor furnace, it needs new flooring, new electrical fixtures, new kitchen, new baths, and the house is worth 150K after repairs but they will sell it to you for 145K It don’t matter that their dogs & cats have been urinating in the house for years.
When you tell them you can’t pay that much because it needs extensive updating, they will tell you if you hold on to it for 5 years you will make money. Then they will tell you about the fruit trees and the extra concrete work they had done & they replaced the roof 7 years ago.
Also the neighborhood is great and quiet.
Time to give them a $70,000 offer and get the frik out of there… Don’t waste more that 15 minutes on these unmotivated sellers.
Unless you like aggravation and punishment.
The key phrase is “no MAJOR repairs,” this can mean different things to different people. You need to see the house. You’d be surprised at how quick you can rack up $10K in a light rehab. Also, just a quick look but I think your comps are closer than theirs is. Who is this realtor, what is their experience? How many houses did they sell this year? Point is make sure you’re taking advice from people worthy of it.
Yea I like my comps better, too.
I will go look at this house, but this gets me back to a question I had earlier about seeing every house.
If I’m every going to go large scale, I can’t go see every house, in which case, how is this possible.
And these kind of numbers are making me wonder how I’m ever going to get any deals.
Should I be expecting to get a deal on 1 out of 100 calls?
All these what if questions. What if you actually had to think & figure things out as you go along? What if you got an education by reading some books? What if you figure things out by actually getting some deals going? What if these questions never end?
What if the economy goes bust, what if it goes boom? Are we really hybrids from Aliens that are visiting our planet? What if the Universe collapses on itself after another 100 billion years? What if it expands forever?
What if you stopped responding to my posts?
<^> (that’s an electronic middle finger)
Update:
I’m getting a lot of calls for people wanting to sell me their home at full retail. Which doesn’t help me at all.
Everybody wants full retail.
Well they’re not getting it from me. I can still give them an offer, but they won’t like it.
Never hurts to ask, though.
Hi,
Hi Mr. Smith and thank you for your call. You say you have a home you'd like to sell, please tell me about it? Well I have a 3 bedroom / 2 bath 1400 sq. ft. home in suburban Orlando neighborhood of _____________. It's in decent condition and I got it from ___________. I would guess it has $10,000 worth of deferred maintenance and a decent yard. What is the address?
Well Mr. Smith you know I am a real estate investor and my wife and I will not be moving into this home, in fact it will cost me closing costs to buy it from you and closing costs to sell it to someone else, and 6% in realtor commissions for the listing and buying agents.
Then it’s likely I will have to hold your house for some period to repair it and then to get it sold which means I am carrying all the utilities, home insurance and the property taxes, I am going to have to upkeep the pool and have the lawn maintenance serviced.
Then I am going to have to pay mortgage costs and any fees or points to buy this home and I am in this as a business. This is how I can offer you cash upfront to you without the hassles as I am taking the entire risk and relieving you of debt and further liability!
Please let me get back to you in the next 12 or 24 hours with my offer! I don’t let the seller even tell me at this point what he thinks he wants to get until I get back to him with a price.
Yea Mr. Smith I did some calculating and I can offer you $55k for your home all cash to you with a closing in 45 days! Well Mr. Smith my calculations show the following costs: Verbally you can list these by phone without divulging the actual amount then if the seller asks what is utilities you can tell him $1,400 for an expected 4 month marketing period.
$1,160 Purchase Closing
$1,410 In Points
$6,000 Realtor Commission
$2,500 Resale closing cost
$1,400 Utilities
$500 Property Tax
$300 Home Insurance
$400 Pool Service
$500 Yard Service
$10,000 Repairs / deferred maintenance
$2,800 Carrying cost
$26,870 Costs
$5,000 wholesale mark up!
Your not telling your seller these numbers necessarily but your making him aware your going to incur all these costs!
And I still need to make some money for taking the risk! ($13,130) Your end buyers minimum profit. (If I added this correctly?)
GR
My most recent call was from East Indian seller named Mohamad, I’ve had the most difficulty dealing with these people.
He has a 4 plex and he wants 145K which is worth about 195K after repairs. Seems like a great price until I looked it over, it’s half burnt, the roof is gone on one unit, the air con units have been stolen off the roofs, the frikin wiring has been stolen, of course they had to punch holes in the sheetrock walls to get it all.
It’s in the worst part of the city, gangs and tweakers and homeless.
I estimate it will take 100-150K to rehab these units. What’s really crazy is this seller has already collected a good chunk of change from insurance. The situation wud piss me off if it wasn’t so funny.
How many deals should I expect to get out of 1,500 letters?
I’ve gotten about 10 calls. Still waiting to get back with the owners on 2 of them.
At least I know I’m getting calls, and I would technically make a profit even if it took me 8,000 letters to get one deal.
I’d rather get a better return than that, though.