Help please

Remember, your money is made on the buy (front end) not on the sale (back end). Make sure you can make at least 20% on the deal (after expenses) or don't do it.

Does it need any repairs? A lot of things can enter into this. Would the end buyer want to buy and hold it as a rental? Or would it be a rehabber that will then want to sell it and make a profit?

A buy and hold person would be willing to possibly pay you more for the property. Remember, when you are working your numbers you have to allow for the repairs, your profit and the profit of the end buyer or it is not a deal.

Where are you in CA?

Karen

I'm in northern California (San Francisco).. It needs about $40,000 in repairs. I'm not sure how to get 20% out of this deal. The rebabber wants to flip it for profit.

When I was reading 30 days to cash I was reading the formula
The apv $274,000
- repairs
- 6% agents commission
- 10% my fee
- 3% closing costs

My total comes below the asking price.
I'm so confused

Many thanks for your advice. It is greatly appreciated

What is your exit strategy?

Here is a rule of thumb way to run your numbers to find out if it is a good deal if you are wanting to wholesale.

$274,000 x 70%= $191,800

$191,800 - $40,000 (repairs) = $151,000

$151,000- your fee = maximum price you offer

You will usually want to offer a little less than the max price to give yourself some negotiating room.

Using these numbers, and if wholesaling is your exit strategy, then, no, this is not a good deal.

It sounds like from your last post that this property is already being sold by a wholesaler.

Karen

My realtor told me that we should not offer low because the inventory is low. There is a lot of cash buyers that are getting these places over the asking price.

Thank you Kareng. I greatly appreciate your help.

Remember that at the end of the day, it is YOUR money not the realtors.

You have to be able to resale the property. If the numbers are not going to work so you can do that, then it is not the deal for you.

The realtor works for you, you do not work for the realtor.

The numbers are what the numbers are... PERIOD!

Would this be the "formula" for an assignment too?

Most realtors do not understand how investors work and how the numbers have to work in order for it to be a deal that works for us. Realtors commissions are also a percentage of the sale, so the higher the sale, the more money they make. Many are short sighted, not realizing they may not make as much on this one deal but if they can do smaller deals over and over they will end up making more.

Yes, this is also the formula that you would use on an assignment. Usually, when you are assigning a deal, it is to another investor.

Another thing that I would like to mention--you may not be able to make 10% on your fee on most deals. I'm not sure where you got this number but it is a little high. You have to be sure that you are leaving what is called "enough meat on the bone" so that the next investor will be able to make a profit also, or you will not be able to assign/wholesale the deal. Of course, the lower price you are able to get the property in the first place, the higher your fee may be able to be.

I hope this helps give you a little more clarity.

Karen

Submitted my offer the way I wanted. I need to provide proof of funds and a $5000 deposit check. Where I do I get the $5000 deposit check if I don't have that type of money? Ugh

On what I could do? Many thanks as always

Money is always helpful. There are no money down techniques in Dean' books that work in some circumstances, but most deals require down payments and/or earnest money.

If you were a part of Dean's more advanced programs, you might have the help that you need and even the financial backing.

For your advice.

I thought I had a house sold Monday, and the prospective buyer couldn't even come up with $500.00 earnest money and a $50.00 option fee although they loved the house. It's hard for people to take one's offer seriously, if there's absolutely no earnest money provided. It's like someone trying to move into a rental without even being able to pay the first month's rent much less a deposit.

Well, at least you didn't place all of the blame on realtors, and I do beg to differ with you. Most realtors do understand how to work with investors and many even do it frequently; it's just that most investors have cash (their own or other people's), even if they're just a buyer investing in their own home.

Of course, I agree with you on the 10%. Most real estate sales people and brokers don't earn 10% on residential property, and they've gone to school and may have years of experience in the industry. Commercial property may be the exception sometimes.