Offers, Offers, Offers! Bought 9 houses! - Posted by SCook85

Rich Folks Funds (nt) - Posted by SCook85

Posted by SCook85 on November 01, 2000 at 21:34:30:

nt

Re: Offers, Offers, Offers! Bought 9 houses! - Posted by SCook85

Posted by SCook85 on November 01, 2000 at 21:36:58:

I make most of my offers through realtors. I hardly ever get face to face with a seller.

Steve

Re: Offers, Offers, Offers! Bought 9 houses! - Posted by SCook85

Posted by SCook85 on November 01, 2000 at 15:04:09:

Rob,
I never base my offer off of the list price of a home. I know the neighborhoods very well that I am investing in and have bought in many of the neighborhoods and know what numbers work from experience.

I come in low and wait for counter offers to see who is in the game with me. I usually look at homes after I have gotten a reasonable counter offer.

Hope this helps.

Steve

Re: Offers, Offers, Offers! Bought 9 houses! - Posted by SCook85

Posted by SCook85 on November 01, 2000 at 15:09:13:

Ben,
I buy houses from many different sources. My offers come in different forms depending upon who I am buying from. Most foreclosures require a full contract however I have dealt so much with the listing agents who carry most of the foreclosures I can usually let a verbal offer fly and they tell me if I’m wasting my time or not. If I have a chance they’ll tell me to put it in writing.

FSBO’s can be negotiated verbally, and then there is online bidding (saves a lot of paper). Auctions, and HUD online have made it easier for me to make many more offers then I used to.

I make cash offers and I don’t get involved with owner financing or anything else. My offers are always based off of the value of homes in the neighborhoods that I’m buying in, never do I base an offer off of the list price. List price is what the seller is asking for a home and has nothing to do with it’s actual value.

Hope this helps.

Steve

Re: Offers, Offers, Offers! Bought 9 houses! - Posted by tarheelT

Posted by tarheelT on November 02, 2000 at 19:50:18:

Steve, don’t you also subtract the profit you want to make to get your offering price, especially if it is a flip? Thanks Tracy Thompson

Re: Offers, Offers, Offers! Bought 9 houses! - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on November 11, 2000 at 12:10:06:

Ted got it almost right. He would have been entirely correct if he had written:

Tacy, I think his profit is “INCLUDED IN” the 25k or 30% that he is subtracting from the FMV.

I use formulas that are very similar to Steve’s.

ARV (After Repair Value) X 70% Less repairs = MAO (Maximum Allowable Offer)

ARV (After Repair Value) - $25K Less repairs = MAO (Maximum Allowable Offer)

Like Steve, I take the lesser of the two and make my offer based upon the calculation, but my first offer is generally lower than the MAO. This leaves some room for negotiation. Every once in a while a seller accepts my first offer which means more profit for me.

The profit, as I mentioned earlier, in “INCLUDED IN” the 25K or 30%. Also included are my costs that are not related to repairs, i.e. acquisition costs, holding costs, and disposition costs. These amount to about 10% of the ARV for properties with an ARV of $60K or more. This leaves me with a profit margin of about 20% of the ARV for houses with an ARV of $83K or more. By striving for a profit of 20%, I rarely, if ever, end up with less that 15% profit. The variable can occur if I’ve underestimated the cost of repairs. I can’t remember ever having miscalculated the ARV of a rehab. If I end up with a profit of at least 15%, I’m happy. In most instances I achieve or exceed the targeted 20% profit margin.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX