Is a good deal always 65% or less ARV? - Posted by Tim Rogers

Real Estate Investing
1

Posted by Tim Rogers on May 14, 2008 at 14:10:40:

Thanks.

2

Is a good deal always 65% or less ARV? - Posted by Tim Rogers

Posted by Tim Rogers on May 11, 2008 at 20:58:34:

I am a new investor and wanted to know if I was passing up good deals because they were not 65% or less. The houses had a great equity spread, but did not fall in that 65% or less range. I am wholesaling and I know investors (buyers) like the 65% and less range. Please give me some advice on this situation.

P.S

I am in Texas.

3

Re: Is a good deal always 65% or less ARV? - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on May 13, 2008 at 08:08:47:

The answer is relative. To make it simple, if you are buying to resell at wholesale prices to other investors or rehabbers, it’s just easier to find out what’s the average maximum that YOUR buyers will pay.

Chances are that they all have slightly different criteria, as some may intend to hold, other to fix and resell, etc. Since properties are not fungible commodities, you’ll have to allow for differences among your buyers’ criteria, as well as other market forces (like decreasing values, if that describes your market).

My friend Cantu is a very high volume wholesaler and his standard answer to the question of “how much does he try to make on a deal?” is “as much as possible.”

On the other side of that, you may occassionally buy wrong or ask too much for a property, or just plain price it wrong, and find yourself with more inventory than you intended. That can really slow your operation down as either your capital is stuck or the cost of capital bites into your margins.

You may end up with multiple marketing channels to resell your properties to, which could include not only investor, rehabbers and other discount buyers, but a retail side that helps you extract higher profit for certain properties that better fit the model of a consumer homebuyer.

So, there’s no magic % discount, nor does it universally transmit to all regions of the country. You’ll just have to discover where the pricing “sweet spot” is in your market and look for ways to add perceived added value.

BTW, Jackie Lange has a pretty darn good wholesale marketing machine in the DFW area and you might cross-check to see what her formulas are.

4

Re: Is a good deal always 65% or less ARV? - Posted by Tim Rogers

Posted by Tim Rogers on May 13, 2008 at 09:10:01:

Thanks Rick. I live in the dfw area. How can I get in touch with Jackie Lange?

5

Re: Is a good deal always 65% or less ARV? - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on May 14, 2008 at 12:54:25:

There may be a better way, but start with Crewealth.com (Jack Miller’s online interactive site) or try Google. Tell her I said hi, if it matters.