OfflineOk so I gave my book to my mother to start reading, and I don't have the formula with me Sad I have a property that was sent to me by my real estate agent:
3bedroom/2bath
2215sq
on market for 75 days
The original Listing Price = $70K
Listing Price = $61,800
i know i need to take out 10% for profit, but what about the fixing costs? how much should i avg in for this? not sure where to go from here. i have searched for the formula here on the DG site, but having a hard time locating it. I've gone through all my bookmarks, and still no luck. Can anyone help?
Thank you,
Rolo
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http://www.deangraziosi.com/real-estate-forums/contracts-and-offers/8336...
http://thebaltimoreinvestor.wordpress.com/2008/05/28/the-maximum-allowab...
http://www.REIClub.com - When Making Wholesale Real Estate Offers, Here Are Some Investor Tips On Writing Up Your Real Estate Offer...
http://blog.timtaylorsuccesscoach.com/real-estate-investing-articles/the...
The standard formula is as follows:
(ARV x 70%) - repairs = Maximum Purchase Price
After Repair Value - Improve Costs - Quiet Costs - Minimum Profit = Maximum Offer.
The Fix And Flip Formula
1. Determine the after-repair value of the house you're looking at. Get an appraiser's help, or look at what similar houses have actually sold for (not asking prices). The price it's likely to sell for is going to be your starting point.
2. Calculate costs: closing fees, loan fees, document prep, homeowner's insurance, title policy, repair costs, interest on loans, property taxes, sales commission, fees, title policy, etc. You want projected costs of all four categories: buying, improving, carrying, and selling. Subtract all costs from the expected sales price.
3. Subtract a profit that makes it worth the effort. Now you have the highest price you can pay. You have to walk away if you can't get it for this price or less. You'll offer thousands less, of course, to give yourself negotiating room.
Hope this will help...Good Luck