Real Estate Information

Luxury Real Estate Information


Rancho Palos Verdes, California Homes
Palos Verdes, California Homes
South Bay, California Homes
Luxury Mexican Beachfront Homes

Featured Properties


Oceanfront Estate Near Trump National

Related Information


Loan Information
Real Estate Information
Mortgage Refinance Information

How Much Should I Pay For This House?


We probably answer this question for someone a couple times every week. The problem is that they don't have a good formula for determining the most they can pay and still make a profit - so they're scared to make any offer. Here's what we use for single family homes:

The (MAO) Maximum Allowable Offer is calculated by first determining what the house will be worth after renovation - the ARV (After Repaired Value); less the rehab dollars required; less the Buy/Sell/Hold (B/S/H) costs; less profit margins.

MAO = ARV - Rehab - B/S/H - Profit

So let's break that down a little further. To determine the ARV, study comparable sales data. Comparable sales are those properties which sold in the last 6 months to 1 year, and within ˝ to 1 mile from the subject house. But other factors must be considered as well. The more characteristics between the properties that are similar, the more valid the data. Make sure that the house itself is similar in square footage, bedrooms and baths, age, style, and architecture. Don't worry about condition except as it will affect the amount of rehab dollars required. Next, look at the neighborhood and the individual street. Do they look the same? Or is the comparable property on a beautiful street while the subject property is on a street riddled with empty littered lots and boarded up houses? The point is to view the potential investment as your end homeowner occupant will. If they could buy your completed investment on the bad street, or a house on the beautiful street - either for $150,000 - which would they choose? The other house of course. Which means your house is not worth the same - it must sell for less to attract a buyer.

Rehab dollars differ from renovator to renovator depending whether they do the work themselves, or use cheap subs, or use an expensive general contractor. The scope of the work should be the same - it is whatever is required to make the investment look like the comparable houses (unless the plan is to sell well under market value). We do not attempt to obtain all of the various contractor bids when we are making offers. All the real deals would be sold before we'd ever have an offer together! Instead we've developed ranges of rehab dollars based on the overall condition of the home. Is it an exact science? No, but neither are the bids - there will always be something missed. So why not work with a guide that is probably 90% accurate and allows for quick offers?

Buy/Sell/Hold costs include expenses such as appraisals, attorney fees, title search & title insurance, loan origination fees, debt service, utilities, insurance, taxes, real estate commissions, and closing fees paid on behalf of the end buyer. Again, these costs vary depending on each investor's individual situation. In the Atlanta area, 15% of the ARV seems to be a good average allocation for B/S/H costs. If you are the renovator, calculate your specific B/S/H costs, then utilize that percentage for future offers.

Profit margins are the fun part of the equation. How much do you want to make? If you're wholesaling the property, you also want to consider how much you should leave in the deal for the investor buyer to make the deal attractive.

That's it. That's how you calculate the most you'll pay for a property. But that's not what you SHOULD pay. It is the maximum you'll pay. It is the deal-breaker. You will not pay one penny over the MAO. Your negotiations should lead you as far below the MAO as possible. The difference in amounts is additional profit in your pocket. What you SHOULD pay is the minimum price below the MAO that the seller will accept.

We call this the MIN-O.

Have a rich week,

Lou

FREE! Real Estate Investing Secrets To Earning $100,000 Your 1st Year! -- 11 Overlooked Real Estate Statregies That Will Turn Your Investing Business upside Down And On The Fast Track TO Success...Guranteed! Plus A Bonus Track With A Secret So Successful It Can Double Your Investing Income Overnight!

http://www.InvestorSuccessTactics.com


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


New York Times

Recent Commercial Real Estate Transactions
New York Times
$14.25 MILLION. 186-188 First Avenue (between East 11th and 12th Streets). Manhattan. A local investor bought these two five-story East Village walk-ups, totaling 14,900 square feet with 50 feet of frontage. They offer 16 two-bedroom apartments, which ...



How real estate pros can survive the Facebook news feed change
Inman.com
Facebook's founder, Mark Zuckerberg, announced that the company will overhaul the algorithm for the platform's news feed. Gearing toward “meaningful social interaction” and away from, what it deems, “relevant content.” Why is this important for real ...

and more »


Macy's, Inc. Real Estate Sales Will Continue in 2018
Motley Fool
Despite the improving sales trends, many analysts expect Macy's to face continued earnings pressure in 2018. The average 2018 EPS estimate -- which probably ignores the recently implemented tax reform law -- is just $2.86. Bears often point out that ...

and more »


Mother Jones

Eric Trump Stands to Profit Bigly From Sweetheart Real Estate Deal ...
Mother Jones
The middle Trump son bought two condos from the his father for half the listing price in 2016. Derek Kravitz and Will ParkerJan. 16, 2018 6:00 AM. Share on Facebook · Share on Twitter · Email; Print. Santiago Hafford/ZUMA. Looking for news you can ...

and more »


Made a real estate deal? Tell us about it
Crain's Detroit Business (blog)
For my new weekly Real Estate Insider email newsletter — which you get with a Crain's Enhanced Membership — we are creating a weekly roundup of submitted commercial real estate deals. The purpose is to add value that you won't be able to get ...



6 secrets to getting a real estate listing every day
Inman.com
We all know that listings are essential to success. Increasing the number of listings you collect each month allows for more possibilities for your business, and it's the most direct way to improve your real estate productivity. The keys to achieving ...



Realtor.com News

Really Bad MLS Photos: 5 Horrific Real Estate Pics | realtor.com®
Realtor.com News
Real estate photos can be gorgeous—or horrifyingly ugly. As proof, look no further than the Facebook group Really Bad MLS Photos, where members share the biggest clunkers they've seen. Seven years ago, Paul Meleedy, a real estate agent in Lakeville ...

and more »


WK Real Estate Earns RELO Quality Certification
RisMedia.com (press release)
Boulder, Colo.-based WK Real Estate has been awarded the RELO® Quality Certification (RQC) from Leading Real Estate Companies of the World® (LeadingRE), the network recently announced. The only program of its kind, the RQC quantifies and qualifies true ...



The Columbus Dispatch

Hot real-estate markets in 2018 leave Midwest cold
The Columbus Dispatch
Columbus and the rest of the Midwest will be left out in the real-estate cold this year, according to the annual forecast of hot real-estate markets by the real-estate service Zillow. None of Zillow's Top 10 hottest real-estate markets are in the ...

and more »


Washington Post

How to expand your real estate investing business into a new market
Washington Post
In my last article, I talked about what I see as danger signs for the Washington-area real estate investment market. I have had those concerns for quite a while, and for the past year or so I've been putting together a plan to diversify my real estate ...
Regal Real Estate Investment Trust (HKG:1881): Is Real Estate An Attractive Sector Play?Simply Wall St
Canadian Real Estate Investment Trust Announces January 2018 DistributionGlobeNewswire (press release)
Financial Newsletter - Zacks Investment ResearchZacks Investment Research
Zacks Investment Research
all 167 news articles »

Google News

home | site map
© 2006 TIGER MEDIA