Need Advice On First Deal --- Please!

Hey guys/gals,
I found an REO where the asking price is 179k, and needs about 25k in repairs. Comps in the area are going for 260k. I am ready to submit my offer, and would like to submit it at about 160k. I have no cash, so sitting and holding this in order to make the repairs and get its FMV is kind of out of the question. If the bank decides to take my 160k offer, what would another investor come in and offer? Do I have to disclose what I bought it for? I was hoping to be able to flip this for a mimimum of 200k.

Thanks in advance!

Comments(5)

  • rjones31st January, 2004

    Junoti-

    In order for you and another investor to make a profit on this deal, you are going to have to come down on your offer--200k aint going to get it. Investors in my area will look at a 30K and up profit, depending on the project. you have to figure in the Investors profit, amount of repairs, holding costs and your cut when formulating your offer.

  • preferred-properties31st January, 2004

    If you have SOME cash (or can get some-credit card/partner???), and want to do this deal yourself, you can go with a private rehab lender. Depending on what the appraisal comes in at, will determine how much money you would need to bring to the table. Your numbers, right now, round out at about 70%LTV. Most private lenders lend @ 65% and you would need about 5% to close. But, If your credit is good, you can get a 70% loan. There are interest only payment plans, even no payment plans for 6 months for good credit.

    If you're totally strapped and have to sell wholesale to another investor, start calling, and ask them for your $200k, see what they say. Dare to be ridiculous. Thats what negotiation is for. You may find someone with cash that doesnt have holding costs. Ya never know.

    Best of Luck!
    Trish[ Edited by preferred-properties on Date 01/31/2004 ]

  • Worf31st January, 2004

    As a rehabber myself, I can tell you what an investor will look for in profit. Take the ARV (after repair value) and multiply it by 70%, then deduct the amount for repairs. This is the highest price that I will pay. Your investors will need about the same margin.
    In your example, ARV=260,000 with 25,000 needed for repairs. Let's look at this;
    260,000 x 70% = 182,000
    minus 25,000 for repairs
    leaves 157,000
    This would be MY offer to you. Some investors might offer more, but NOT 200k!
    If you want to make some quick cash, you have to be able to buy it REAL cheap and be willing to make about 5-10k per deal and move on to the next deal.
    Pigs get fat, Hogs get slaughtered! Don't be a hog. Good Luck!

  • Junoti31st January, 2004

    Thanks very much for all the replies. Worf, your calculations helped out tremendously. I did speak with another invester, and he said the max he would offer would be 152k, and that was with "money built in for me bringing him the deal".

    Thanks again.

  • omega131st January, 2004

    If you still need help, PM me so I can provide you with the contact info of somebody in your aria who can help you close this deal with ease.

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