Posted by Dave K on December 01, 2005 at 16:09:22:
If it’s really worth 50,000 after 5,000 in repairs you need to get it cheaper than 30,000. How do you know it’s worth 50,000? The formula for houses in that price range is ARV (AFTER REPAIRED VALUE) - 17,000 (Holding costs) - repairs = MAO(Maximum allowable offer) Never pay MAO. That’s the break even price. The MAO is 28,000 according to your numbers. You don’t want to Lease Option because the tenants you’ll get for a 50,000 house would be undesirable. I think this is a “flip” only deal. That’s if you get it at a good price. This guy doesn’t seem motivated. Pass.