I heard it recommended that in dealing with preforeclosures it's best to stay away from houses with less than $40,000 in equity. Any ideas on why this is true?
I would say it is all relative, 40 k in equity on an 80k house or on a 500k house. I would say it also depends on how much of your money you will tie up and for how long.
As a general rule of thumb, rule of thumbs are bad
Everything has to be examined in context and just use your common sense when analyzing deals. Always leave yourself some leeway and overestimate your costs. It'll keep you out of trouble and keep you in your own house.
There is a say: beggers cannot be chosers. I would say it all depends on what is the market situation in your state. For example in So. CA, getting $20K on the end of the day is considered great when you have a hard time getting any equity in any property in 80% of the time.
If you are talking about working with a home owner in preforclosure, then is it NOT true. There are many different ways to skin a cat.
Brenda
I would say it is all relative, 40 k in equity on an 80k house or on a 500k house. I would say it also depends on how much of your money you will tie up and for how long.
I would say it depends on may things i.e. your exit strategy, r u wholesaling, building rental portfolio etc..
Good Luck
As a general rule of thumb, rule of thumbs are bad
Everything has to be examined in context and just use your common sense when analyzing deals. Always leave yourself some leeway and overestimate your costs. It'll keep you out of trouble and keep you in your own house.
Ryan J. Schnabel
Are you sure you don't mean 40% equity? $40,000.00 doesn't make sense to me.
Please clarify
Lori
[addsig]
There is a say: beggers cannot be chosers. I would say it all depends on what is the market situation in your state. For example in So. CA, getting $20K on the end of the day is considered great when you have a hard time getting any equity in any property in 80% of the time.