Figuring out what to pay for a "flipper" property.
Posted by Ward-CA- on August 31, 2002 at 07:11:26:
In Reply to: Advice on buying vandalized foreclosed house next door posted by Dawn in Ohio on August 30, 2002 at 10:15:12:
: Hi All,: Wanted to see if anyone had advice on buying the foreclosed house next door. Here are the details...: 4 bdrm 2 bath 1 car garage. Mortgage 100k - appraisal price for the sherrif's auction 93k. Mortgage company foreclosing is primary holder. She owes $3,500 back taxes before penalties. Property has been abandoned for 1 yr and vandalized extensively. All dry wall, flooring and kitchen cabinent/ appliances need replaced to make house habitable.(approx. $15-18k): What's the best way to go about obtaining this property and should I offer the appraisal minus the repair costs? This would be a investment property.: I feel like I've done a lot of research, but have doubts about what to do next.Would appreciate any wisdom one has to dispense.: Thanks,: Dawn==============
Dawn,
Property that’s bought for investment purposes entails the return of some profit for the exchange of capital and labor involved. So offering the seller the $100K appraisal minus the $18K in estimated repair costs won’t give you any profit, and that’s the whole point for going into an “investment deal”.
No, you need to figure out the total amount of out-of-pocket cash (capital) this deal is going to require, and then figure out an attractive return on that money (ROI) and then make sure your offering price is low enough to pay out the return of your capital and it’s ROI.
Hope this helps.
Follow Ups:
Comments:
