OfflineI have found a property that is a bank REO here in CT. I would like to flip this property to a rehabber. Can anyone provide a formula to use to help me determine what I should offer the bank?
Any help would be greatly appreciated...thanks so much
Lori
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LORICT
You will want to first calculate the FMV of the home using comps in the area.
Subtract the cost of repairs
subtract closing costs (3%)
Subtract any holding expenses (1-3 months) (mortgage payments, ins, taxes, etc..
Subtract REA Commission 6%
subtract the amount of profit you want to make
For example. If you calculate the FMV to be $200,000 and repairs are $5,000, it would look something like this.
200,000
-5000 Repairs
-6000 Closing Costs
-6000 Holding
-12000 commission
-10000 Profit
Your MAXIMUM offer will be $161,000
Of course start out less than that, you can always go up-you cant go down