so i sent a letter of intent - Posted by Francis Obasi

Posted by GA GUY on November 30, 2003 at 20:55:49:

Yes, you should wait for a yes before you start to market the property. First of all you do not have the deal secured and if you’re not careful the wrong investor will back door you and get the deal themself and X you out of the deal all together.

so i sent a letter of intent - Posted by Francis Obasi

Posted by Francis Obasi on November 29, 2003 at 22:41:34:

Hello everyone,
Please can we leave the leftovers for a second (i finished mine already).
Well, I talked to a seller, whom I think is also an investor and he just put his property on the market on Monday, after doing 90% of the rehab on the property. He is selling for 85k and I found that the property is appraised for 90k and the recent selling price around the area with the same features are going from 110-130k. Now he needs to sell so asto take his money out and invest in something else. Okay, I just sent him a letter of intent with 79k as my price, should I start looking for investors to assign the contract to without getting a yes on the offer or is 85k + 5k repairs an okay price for buyers. I am not looking to make that much on the property myself (1k-2k).

So my question is should I wait on the seller to say yes before I email every Tom, Dick and Harry that I know about the property or should I wait for the seller to say yes.

Also when I did my calculations, I used the 110k as my retail rice multiplied by 80% -5k - 2k which gave me 81k but I decided to offer 79k just to make the deal sound sweeter and also leave room for me to feel comfortable asking for 2k for the deal.

Let me know what you think.


Okay you can go back to the leftovers.

Re: so i sent a letter of intent - Posted by Brent_IL

Posted by Brent_IL on December 01, 2003 at 23:44:22:

Well, here’s what I think. I think you won?t be able to sell the contract.

The most prominent rehab formula is After Repair Value times .70 minus Repairs minus Profit minus Holding costs = amount of purchase offer. Experienced rehabbers offer less; sometimes much less.

You were right to select $110,000 as the ARV.


$110,000 x .70 = $77,000 minus $5,000 repairs (Optimistic?) minus $5,000 Profit (Minimum equal to repairs) minus the fee that you want and one month?s holding, say $3,000 (Very optimistic) = $64,000 maximum offer if you encounter no other costs and disregard closing costs. Anyone you try to flip to will be looking at the same numbers.

If you?re going to search for a handyman buyer, my suggestion is to get an option in lieu of a purchase contract, so you aren?t locked in.