Posted by Stan on May 03, 2004 at 15:46:56:
Only you can decide what offer makes sense for you. Although, it is not rocket science. Look at it like this. Assuming you are wanting to fix up to sell.
Take the the price that you can sell it for subtract the cost to fix it up, then subtract your desired profit, subtract the aquisition costs, subtract your holding cost and finally subtract your selling cost and if you are a newbie or lacking confidence also subtract a misc cost. Should be your offer.
If I can selle a house for $100,000 and it need $10,000 (again, this is just for example) in fixup you can bet on the following structure:
ARV - 100k - 10k Fixup - 20k profit (I do not touch any rehab for less than 20k payday) - 5k acquisition costs - 2500 holding costs - 6k selling cost = about 56500 would be the most that I would buy the property for. Now these numbers are a bit of a strecth for me because there are so many investors that can’t find ther a$$ with a flashlight buying this same property for $80 - $85k. So I am usually in the $250 - $300 range with a large profit margin. However,the same would work. Just make sure that you know that the 10k in repairs are only going to be 10k. 10k is not going to get you much work mind you. That estimate will either make you or break you.