More important than the area is their situation. The most important thing is to find out what the motivating factor is for them selling, then find out as much info as you can about it/them (how much owed, credit situation, relocating, etc)
I would say the most important "formula" to which we all subscribe is "buy low, sell high." But DaShow is correct. Find out all you can about the seller and his situation. Sometimes it's obvious (anyone remember hurricanes Bonnie, Charley, Frances or Ivan in Florida this year?)
Ask lots of questions and you'll figure it out. And if you don't have one, get a mentor, an agent and an attorney to guide you through the process. Yes, they cost money, but so do mistakes.
A good formula is the one Ron Legrand teaches. It's ARV(After repair value) * 70% - the cost of repairs. This will give you the Maximun Acceptable Offer you should present to a seller. In addition use your intuition to feel out a seller.
The 70% of after repaired value minus any repairs is a very good goal but frankly this business is not cut and dry. There may be times that this formula is way too much to pay for a property and other times where buying at market value is worthwhile.
What I recommend doing, rather than using some simple formula, is figure out what you plan to do with the property, what it costs to do that, and what you can buy it for. Run the numbers and see if it makes money.
Thanks all to the great replies! I appreciate the advice about 'feeling out the seller', and getting to know your market. I also really REALLY appreciate the numerical formula; something I was really looking for. I think that I'm a victim of every begining investor's case of the jitters, as I haven't made any real offers for some time. This has been out of fear that I haven't learned as much about my territory as I can, however, I think I just may reading into the details too much... Anyway, thanks for the support and advice.
More important than the area is their situation. The most important thing is to find out what the motivating factor is for them selling, then find out as much info as you can about it/them (how much owed, credit situation, relocating, etc)
I would say the most important "formula" to which we all subscribe is "buy low, sell high." But DaShow is correct. Find out all you can about the seller and his situation. Sometimes it's obvious (anyone remember hurricanes Bonnie, Charley, Frances or Ivan in Florida this year?)
Ask lots of questions and you'll figure it out. And if you don't have one, get a mentor, an agent and an attorney to guide you through the process. Yes, they cost money, but so do mistakes.
Good luck,
Bob
A good formula is the one Ron Legrand teaches. It's ARV(After repair value) * 70% - the cost of repairs. This will give you the Maximun Acceptable Offer you should present to a seller. In addition use your intuition to feel out a seller.
The 70% of after repaired value minus any repairs is a very good goal but frankly this business is not cut and dry. There may be times that this formula is way too much to pay for a property and other times where buying at market value is worthwhile.
What I recommend doing, rather than using some simple formula, is figure out what you plan to do with the property, what it costs to do that, and what you can buy it for. Run the numbers and see if it makes money.
GOOD LUCK
Thanks all to the great replies! I appreciate the advice about 'feeling out the seller', and getting to know your market. I also really REALLY appreciate the numerical formula; something I was really looking for. I think that I'm a victim of every begining investor's case of the jitters, as I haven't made any real offers for some time. This has been out of fear that I haven't learned as much about my territory as I can, however, I think I just may reading into the details too much... Anyway, thanks for the support and advice.
Patrick