Posted by SueC on July 05, 2001 at 13:51:06:
If your comps and repair estimates are correct then the “standard” formula for determining your max offer to flip is $125K x .7 - $5K = 82,500 for your MAX offer (not your starting offer). Some people modify this depending on the area or market temperature to only deduct $20K or 20% for profit/holding/misc so $125K - $20K - $5K = $100K. If you are flipping then you should probably go with the lower numbers since you want to make some $$ and so will your buyer. You are right that this deal looks a little thin to flip esp. if you are off on the repairs or if the property isn’t really worth a $125K ARV. It sounds a little non-conforming with the 4th BR being a garage, etc. so that’s something to think about too.
Do you just want to flip? If it only needs $5K of work to make it worth $125, why not take it subject to for $1,000 to seller, make their payments and resell on a L/O to a buyer for $130K? Or “pay” your buyer to do the work by selling to them for “only” $125K plus their repairs (of coure approved by you and done in advance of them moving in). Just a couple ideas off the top of my head.