Posted by Joe_NE on November 17, 2003 at 17:58:49:
Jim, Thank you very much for your thoughts.
Criteria for Pretty Homes with Little Work - Posted by Joe_NE
Posted by Joe_NE on November 17, 2003 at 16:50:25:
Rehabbings use a rough criteria of (ARV x .75) - minus repairs - profit = Offer. Of course, that’s not a hard rule but it’s the idea for fixer uppers.
What kind of GENERAL criteria should be used on pretty homes in nice neighbors that require very little work? (i.e. replace some carpet and doors, minimal paint job)
The intention is to flip it… would 80% of FMV be enough as an investor?
Thanks.
Re: Criteria for Pretty Homes with Little Work - Posted by Rob FL
Posted by Rob FL on November 17, 2003 at 22:23:22:
There is no hard rule. Formulas are good, but not always. You need to know your market.
My market in Central Florida has been on fire for about 2 years now. Everything that is priced right that doesn’t have some major problem sells almost immediately.
I’m buying a house Monday that needs the interior painted and a few cosmetics, maybe 2-3K total in repairs. My price is 97K. As soon as we close it’s going on the market for full retail at 119K. I expect to have about 8-10K profit in my pocket by January.
Re: Criteria for Pretty Homes with Little Work - Posted by domineaux_TX
Posted by domineaux_TX on November 17, 2003 at 18:14:45:
As a real estate investor you should be looking for motivated sellers. Does that mean you have a specific factor to used based on FMV…I think not.
I’ve known investors who got into this business buying houses at 75% to 80% of FMV. How could they big succesful you ask? Appreciation and inflation, along with tenants paying the mortgage.
Better quality homes will attract better quality tenants. You can be more discriminating in your tenant selection as well. You shouldn’t have anywhere near the tenant issues renting better quality properties.
Every real estate investor does not have the same criteria for their investments. Just like in stock investments there are people more disposed to risk than others.
Frankly, I think it most important if you understand yourself well enough to know the kind of investments you will be comfortable making.
If you pay too much, in neighborhoods that are going downhill, you may have losses over time. If you acquire the property competitively in neighborhoods, with good schools, home owners care for their lawns and properties, you will probably get a darned good return on your investments.
----Also, you can have your money working and your real estate should exceed anything you’ll make in equal or similar investments at similar risk levels…without incurring tax liabilities each year that have to be on income earned.
It will also be easier to sell better properties in better neighborhoods.
Re: Criteria for Pretty Homes with Little Work - Posted by Jim FL
Posted by Jim FL on November 17, 2003 at 16:55:55:
Joe,
With al due respect, we cannot tell you.
The number you seek would be dictated by local market.
Some areas very well might have a ton of buy and holders who would pay 80% or above for a nice house needing little.
Other areas, you’ll be hard pressed to wholesale anything for more than 65-70%, and lower.
Find out who the buyers in your local area would be for houses like this, and determine the buying criteria they employ.
As long as your deal beats that, leaving room for you, the number works.
I personally, would not pay CASH at 80% for any property, no matter its condition.
That’s just me though.
Good luck,
Jim FL
Re: Criteria for Pretty Homes with Little Work - Posted by Fred(MD)
Posted by Fred(MD) on November 25, 2003 at 20:58:29:
can i ask how you found this property of yours?
what’s the best way to find such deals?
Do you have an extra room? I’m coming to visit. - Posted by MicheleCO.
Posted by MicheleCO. on November 18, 2003 at 24:04:08:
nt