For The Gurus! A Question
I would like to ask, " What is your idea of a good deal" as in, I have found homes with much equity in them but I am unsure as to what is con sidered to be a good enough amount to call it a "good deal". Who has to be paid, and what should I be looking for?
I'm waiting for the gurus to show up so I too can hear what they have to say.
While we're waiting, let me talk out loud. When I first started out, anything which was on the positive side was a "good deal". As time progressed, I became more successful and my requirements for what was a " good deal" were raised. Now, what I consider a good deal is what others may consider a "homerun good deal". So, a "good deal" is an ever changing and dynamic target to hit".
My answer would be that it depends on your own criteria and standards, You and you alone can determine what's a :"good deal".
My one suggestion would be that after you do your homework (due diligence) and risk analysis, you look at the profit from a per centage point of vue to determine if it fits, your "good deal" reguirement. Example :
$60,000 profit. On a $100,000 purchase, (60%) good deal?? On a $1,000,000 purchase (6%) good deal? Get the picture?
Sammy is right on, I would ad that I would never dco a deal for less than 10K profit (hopefully on a less than 120K house that I only held for a couple of months).
Get the holding costs down (6 months worth) repairs, sale costs (9% with realtor, 4-5% without) etc. and then add 10% +$10,000
ANy deal you make money on is a good deal, but the ones you hit a home run on are the ones that make you love the business.
This is too vague of a question and it all depends of the following factors:
-Are you retailing?
-Are you wholesaling?
-Are you lease optioning?
-Are you keeping for long term appreciation?
If I am retailing houses under $300k I want to make at least $12k after all the realtors are paid. Some people say I am crazy, however I do volume.
If I am wholesaling, I want to make at
least $4k. If I can make more so be it.
You have to leave room in it for the other investor as you can only skin a cat once.
If am lease optioning I want to make at
least $20k. If I am going to babysit for a year this is my bottom line. I also know that statistics show 50% of all lease options never close.
I am am holding for long term appreciation, I will pay 80% of market value in hopes of appreciation of 5-10% a year in a good neighborhood. This is not hard to do. Just cut realtor expenses and offer to close in 10 days.
If I am purchasing a my own primary residence I will pay pay full-retail value minus realtor fees. I personally don't mind paying this if it is my dream house in a neighborhood I want to live in. Of
course I will negotiate for much lower, but this is my bottom line. Besides, need to keep the wife happy!
Best Riches,
Jeff Adam
[addsig]
Hi Bj2964,
I know of a local investor who buys houses to retail and he is happy to make $4,000 - $6,000 net per transaction. Although those number are not exciting to me, he does well at doing those all year round.
I enjoy buying houses for retail, that pay me $40,000 or more. However, when I buy houses for under $200K and I can retail them quickly and net $20,000 or my, that is a good deal to me.
I know that there are some investors that will not touch a property if it makes, say less than $10,000. Each investor has their own way that works for them, but let me give you a real world example.
I recently came across a house that I could buy for about $70,000. After remodeling it, my numbers showed me that I would only make about $10,000 + . The investment was low, but in my mind so was the profit. I wasnt going to buy it, but here is why I did.....
I didnt have anything else going on at that time, and as long as this property didnt take me away from other houses that pay more money . . . I might as well make the $10,000. If I didnt, someone else was going to!
So even if you make rules for yourself, always leave room to make a new decision , based on new information!
Best of Success!
BAMZ
BAMZ:
Where have you been lately?
Jeffrey Adam
[addsig]
Wow!
Three super intelligent answers, each with a different take on what is a good deal, combining all three certainly explains what a good deal should mean to just about anyone!
Thats great guy's, I will look at the options I have and make the best decision I can. I appreciate all the input.
Wish me luck!
bj2964,
What's a Guru?
John $Cash$ Locke
WOW BMAZ $40,000 per deal? You are better then Ron Legrand!!!!
Great talking guys! I also took notes.
Does Ron LeGrand comes on this site? I think "they" call him guru because he sells people courses for the big bucks???. Seriously, can someone explain a 100% pure 'newb' what's "GURU"?
Jeff,
I am new to this business but I know about wife/s. When internet crashed several years ago I managed to pull out off my Corp. as much as... well, that's private but what I can share with you today is that my dear wife decide that big houses, boat in Caribbean and all the luxury cars I purchased for her wasn't enough, she needed a boyfriend. Ah, I couldn't program or buy her that but she got divorce. Pure lawyers, they couldn't find more then what I left for them to see. Hey, it was good why it lasted...
"affection to money -dummy" not the love.
[ Edited by MikeMo on Date 02/25/2004 ]
BAMZ brings up an interesting point which applies to almost any business.
If you have excess capacity then go ahead and use it for the deals that are a little less profitable. Just make sure that doing the less profitable business doesn't interfere with the more profitable business.
Seems simple I know but many overlook this for some reason.
I believe the term guru means someone very fluent in whatever thier focus. Another term I hear often used is "seasoned".
Just my thoughts