OfflineHere is a question for everyone but especially for those with wide experience.
How much to offer to the owner. My intention is to flip the property with the following:
Duplex - nothing to fix - (according to the owner)
Income - $1200 per month
Comps - $89,000 (totalview and others)
The owner want me to name a price. I know he is
motivated.
The property is located in Philadelphia, PA, just there are interests.
Any suggestions will be very much appreciated.
__________________
offer him 30-40 percent lower than ARV. Blessings to all. LA
Everytime you repeat the words "I CAN DO IT" with conviction, you cancel or override your fear and increase your confidence. By repeating this affirmation over and over, you can eventually build your courage and confidence to the point where you are unafraid. -Brian Tracy-
Wholesaling is a cash strategy, rule of thumb is never pay more than 65% cash for a home. Therefore offer min of 35% off because a smart cash buyer will not buy for more than 65%. Discount depends on how motivated the owner is and ugly the house is.
Here's a standard formula for cash offers
Arv
*.7
-repairs
equals max allowable offer (your buyer pays this amount from you)
subtract your profit (5-10k)
equals your offer
Hope this helps.
"FAITH is being Sure of what we hope for and Certain of what we do not see." -Hebrews 11:1
Dont do anything until you get TRUE comps from your realtor! Those websites are not accurate enough to determine ARV. Dont take the owners word on repairs! Get a general contractor to go in there and do a free estimate for you.
Get three good retail comps and three good foreclosure comps for the property. Average the price/sqft on the retail comps and take it times the sqft of the subject property.
That is your TRUE ARV.
Offer 65% of the ARV minus the repair costs, closing costs, carrying costs and your assignment fee if you are wholesaling it.
Use the foreclosure comps as a negotiating tool.
Tell the homeowner that they are competing against foreclosures in their area and that their house needs this much in repair. In order for you to buy their home, fix it up and resell it for a profit, this is the most you can pay. If they do not accept your offer or reasoning, move on!
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