Very new and trying to learn

[Dena Zeid]

I am very interested in REI. I am new and my knowledge is slim but I really want this. I can't seem to understand a few things about finding a good deal.

1. What's considered a good investment deal? At what percent below market value assuming renovations will cost 15k and the purpose is to flip?

2. Where do I find a good deal? MLS, shortsale, foreclosures, REOs don't seem to work since the big experienced investment moguls aren't allowing the small fish like me to breath!!

3. If a seller has equity in their home why would they be willing to sell for anything less than the market value even if they are in prefolrclosure? I can't seem to wrap my head around this.

4. Can a seller with negative equity sell their home for less than market value? I have read in a previous post that you should direct your mail to sellers with negative equity as we'll but can't seem to quiet understand.

Sorry for the many questions, again I am trying to learn and I have the desire to do this. Any reply would be greatly appreciated.

[Eric Black]

Hi Dena,

Let me give you my two cents:

1. Everyone has their own criteria to determine a "good" deal is. However, a typical flip formula that is commonly used is ARV - 30% - repairs - profit= MAO. Just in case ARV- After repaired value. MOA- Maximum allowable offer. So if you have a property where the after repair value is $100,000 then -30% would be $70,000. Assuming the property needs $15,000 in repairs that would put you at $55,000. Finally, if you're looking to wholesale the property and make $10,000 then your maximum allowable offer would be $45,000.

2. There are a number of ways of ways to find deals. I would recommend doing some searches on BP for "wholesaling", "direct marketing" and "finding sellers".

3. There are a number of reasons. They might be out of area owners and not want to deal with a rental anymore and don't want to deal with getting a property ready to sell on the retail market. They may just want a quick close and not have to deal with realtors, banks, etc.

4. Yes and no. They can do a short sale which means they sell the property for less than what they owe the bank. This type of sale requires the bank to approve the sale price however and it is usually a long, frustrating process. That being said there are people who are making good money using this strategy.

Best of luck!