OfflineMy husband and I have been searching our small town for good deals. Things here in Montana are rather backwards. Everyone believes you should buy a house, rent it for a loss, then, in a few years, sell it for a substantial profit. I, unfortuantely, can't subscribe to that way of thinking! So, I finally found a realtor that is investment minded and he is doing an amazing job helping us out.
The property: 3 bed, 1 and 3/4 bath, 2400 sf, 2 city lots built in 1942. It has 1200 usable sf in the basement with one room that was being used as a 4th bedroom. It was built in 1942, but all the electrical, etc. have been brought up to code. The garage is an add on and needs some work, but it's a one car attached.
Here is the offer we just made today. The sale of the house is somewhat like an estate sale so it will have to be approved by the lawyer over seeing the property. It was appraised at $169,000 in "as-is" condition. This is our offer:
$141,250 purchase price
40,000 repair/cosmetic costs
3,500 loan fees
3,400 carrying costs
Total cost: $188,150
The market is soft right now but the list price, when complete, will be between 270k and 315k depending on the finished product.
So, our profit will be between $81,850 to $126,850.
We expect the sellers to counter, but we have already set a top price of $160,000. That will still give us a profit between $63,100 to $108,100.
The FSBO's are few and far between out here so having an excellent realtor has made a huge, HUGE difference in our ability to invest. So, a word to all those out there with a realtor who is not performing, find another one! I feel like I'm in a whole new world with this realtor.
I'm pretty excited because this flip is going to be a family venture!
Roni
The owners, or should I say the laywer, of this property have countered with an asking price of $157,000. That would still give us a profit of anywhere from $52,000 to $97,000 on a flip. Also, the house was appraised for $169,000 so that's an instant equity of $11,500. Even if we were to only get the $52,000 I feel as though it will still be a good deal.
We have to respond by 8/8/08 ata 5pm. Any comments or suggestsions?
Roni
Are you pretty confident with the comps of houses in the area that have recently sold? Have you looked at a good number of houses? Is the "after repair" list price conservative or the top of a BPO?
Ultimately, if YOU feel good about the deal (and it looks like you HAVE taken into consideration the holding costs) and your numbers work for sure, then go with what that tells you.
I hope that doesn't sound discouraging. It's exciting to do that first deal! You just want to have all your ducks in a row.
Best wishes for you on the whole experience! Keep us informed!!
God bless,
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
Yes, I feel pretty confident about my comps. I went through First American title company to get them. I've also been driving/researching this neighborhood for quite a while. I figured I would compute my profit by using the lowest possible value that house would sell for in a soft market, to the high end where it would sell but probably sit on the market a little longer. After doing all my research, I did find that the least I would probably make is $50,000, and that's padding my expenses by $15,000 for any unforeseen surprises. I hate those kind of surprises!
I am thankful to have someone looking over my shoulder to make sure I do have "all my ducks in a row". Especially somone like you with so much experience!
Thanks again,
Roni
When a sister wins we all celebrate!
Roni, I wanted to say, too, thanks for putting the picture in. You are one of only a few that have taken the time to do that. I love it! and Anita will be proud.
God bless,
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
yeah, i'm gonna agree with rina on this one, and roni you sound like you know whats your right from your left(which is good), so it sounds like you have a WINNER, so i would be exceited too!, if it were me personally with the way the market is, i would counter to like $149,000 to save just a little more money, you know to be sure, just in case it's needed for a financial surprise, do you see what i'm saying?, if you offered $149,000 that would give you an additional cusion of $8,000 for a total of $23,000 of room, you can NEVER be TOO CAUTOUS, (excuse my spelling), YOUR HERO, SULLY.
YOUR HERO, SULLY
When the realtor dropped off the counter she told my realtor "if we didn't accept the deal we may as well not make a counter". So, we decided to tell the listing agent that it was well over what we wanted to spend so we would have to think about if for a while. Since it hasn't had much traffic in the past couple of months we figured we would let the listing agent/family stew over it for a while. Then, in a week or so we would slam them with an offer of 149,000 or so. We are experiencing somewhat of a slow market and those that are buying are looking for the best deals on houses that don't require a lot of work.
Also, since the house appraised for 169,000, I was talking to my realtor about offering 169,000, but asking for $20,000 in "Seller forgivable financing". That means $20,000 of our down payment would be "foregiven" at the closing and we would only have to come up with $5,350.
Thanks for the compliment Sully, about knowing my right from my left. Sometimes I feel like I try so hard to understand everything that my head starts spinning. That's pretty much when I end up with a headache!!!
Thanks,
Roni
PS - don't worry about your spelling. I'm a math teacher!
Roni
Nobody knows the area better than you do. So if you think you found a winner, then make it happen. The number looks good if you have done your homework and your research. If you don't take action now, you might regret it later. I think once you get your first deal in placed, then you know what it takes to make the second deal, the third deal, and the next think you know, you'll be on your way in making a good living in real estate. Good luck and happy investing!
LL
hey, if you think by shifting the numbers around and re-hashing the deal may get a different result then, i'm all for that, the end result is the same, you still win!, so, i think that could be a good idea, you know, proposing the "seller frogivable financing", the bank may look @ the deal differently, maybe more in your favor, BUT, for now i'm thinking your doing the right thing by seeing what thier next move will be, i think that $149,000 is a solid offer based on the market and what you said in your post, YOUR HERO, SULLY.
YOUR HERO, SULLY