Ok, here is the deal
ARV: $73,000
Sales Price: $57,500 (including 6% for closing)
Repairs: $2500 (seller contribution)
I know that the rule is usually 70% of ARV, but what about when you roll the 6% for closing into the loan amount? When I rolled the 6% in the loan that puts me at 79% of ARV. I calculated it without the 6% closing and that puts me at 74% of ARV. Is this too much of a spread???
Basically I can get a house totally remodeled and the roof is new for 57,500. Three houses on that street sold from 73-79K. What would you do?
Nervous 1st Time Investor… :-\
Hey,
Why is the house being sold for that amount? When did the other houses sell for that amount and are they comparable to the house you want to buy? What is it you want to do with the house once you get it (exit strategy)?
Peace,
Richard
My friends father is very ill and he owns about 8 properties. He is currently selling 3 right now for his father. He is trying to net 50K-51K. I am trying to structure the deal so that both of us can come out happy!! He just had a new roof done and he told me that he would give me 2500 for the inside work. The 57,500 includes 6% for closing.
These are the actual COMPS from my realitor in 2006, 5 houses sold on that street for:
6615 xxxxx ST 1,070 1966 $46,000
6603 xxxxx ST 1,438 1966 $79,500
6603 xxxxx ST 1,438 1966 $54,500
7214 xxxxx ST 1,408 1974 $76,000
7211 xxxxx ST 1,064 1977 $72,000
SUBJECT PROPERTY 1,187 1958 $57,500 (WITH 6% CLOSING)
PLEASE LET ME KNOW WHAT YOU THINK?!?!?!
THANKS
Hey,
Hmmm. The houses in the 6000 block are older houses than the ones in the 7000 block it appears. Your house is 8 years older than the oldest house listed in the comps and is smaller than the newer homes. All those houses combined average $52/sq.ft. Yours, without the 6%, averages $48 which is 92%. But you are on the ground, see the house and can research the market.
Peace,
Richard
Based on the comps that you provided, it appears to me that you’d be paying 100% of the retail value. I’d definitely pass!
Mike
Hey,
Exactly the point I was trying to bring him to see. You are up early, Mike, or, if like me, still up. Have a good day!
Peace,
Richard
You guys are awesome!!!
I understand what you are saying. I should have put dates on the COMPS. The one at 6615 just sold 2 months ago and the guy that bought it is an investor. I ASSUME that it will be a FIX & FLIP. Notice that the other house at 6603 is the same listing. One sold in September for 54.5K and sold in March 2006 for 79.5K. I should have pointed that out. Should I still walk??
6615 xxxxx ST 1,070 1966 $46,000
6603 xxxxx ST 1,438 1966 $79,500
6603 xxxxx ST 1,438 1966 $54,500
7214 xxxxx ST 1,408 1974 $76,000
7211 xxxxx ST 1,064 1977 $72,000
Im new so I don’t know much, but it seems that you have become a “motivated buyer”
Don’t become obsessed with one property. Find one with which the numbers are easy to work.