New at this...need help

[Shannon Garces]

New investor and first time home buyer (looking for first flip). Found a $200,000 short sale in neighborhood that houses go for at least $400,000. What do I need to know before putting in an offer

[Kevin Andrews]

When looking at a flip, you would need to have an accurate estimate of the ARV (After Repair Value) of the house, which you can get from a realtor, or doing your own comps online. Also you need to know the repair costs of the house. How much money are you going to have to put into the house to get it to the ARV? Also you probably want to figure in a profit for yourself. With that information you can then figure out what price to offer. A commonly used rule of thumb is the 70% rule.

EXAMPLE: ARV 400000

  REPAIR COST    60000

YOUR PROFIT 30000

400000 * 70% = 280000

280000 - 60000= 220000

220000 - 30000 = 190000 (Offer Price =190000)

This is just an example, but you can plug in your own numbers and go from there