Hello everyone thank you for taking time to read my thread. Over the past few months i been really trying to jump into real estate investing. Over these past few months i seen some great deals that i knew no doubt about it, it was a great deal but did not have my financing in order to act on them. Now that i got my financing ready all my money for closing costs now i cant find any deals that i know is a great deal. My question to you is what do you look for in a property to know if its worth your time and money to invest in ?
As I have said before.
First, get some comps to find out what the property will be worth after it is fixed up. ARV {after repair value}
Take the ARV and multiply it by .70 = X
Now take X and subtract the rehab cost + 5%, holding cost, insurance cost, the cost to buy, the cost to sell, the cost of the money you will use. = this is the most you can pay for the house. MAYO {maximum allowable offer}
Be sure to start low so you can go up if need be.
This is a simplified version of an industry standard formula.
A hard money lender friend of mine likes to see .65
You can do the project your self or if you belong to a REI club and have a list of buyers. You could wholesale deal to one of those rehabbers.
You make your money when you buy.
I hope this is of some benefit to you.
Bruce
I buy and hold. A property is good for me if it cashflows at least $125 a month ($1500 a year) and preferably $200+ a month. And, cashflow means after EVERYTHING is paid for!
Keith