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Updated about 8 years ago on . Most recent reply
![Gus Alonzo's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/565865/1621492725-avatar-gusa2.jpg?twic=v1/output=image/cover=128x128&v=2)
How to know when you have a deal?
Hey guys,
I am a newcomer to BP and I have always had this question. What is the critera that professional flippers or buy and holders/BRRR use when figuring which house to purchase. I know its a little different for everyone, but I want to be able to know a deal when I see one. I also know that there are calculators on this site but I want to here what you all think and use. Thanks guys!
Most Popular Reply
![Kenneth Garrett's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/672787/1694554985-avatar-kennethg22.jpg?twic=v1/output=image/cover=128x128&v=2)
Gus,
First and foremost it all about the numbers. Buy and Holds you can generally pay a little more because the rehabs are rental rehabs not flips. BP book on "Rental Property Investing" by Brandon Turner is very thorough and will give you a tremendous amount of education.
In all real estate you have to know your market. My strategy is Buy and Holds but I do a flip a year. On the flip side ( no pun intended) remember to include all of your costs.
Cost
Closing cost on the buy side
Rehab amount including contingency for overruns on budget
Holding cost ( taxes, Insurance, utilities, cost of money, i.e., hard money, private money etc). I typically use Private Funds to acquire and rehab projects.
Sell cost (closing cost, title insurance, taxes, doc fees, real estate commissions, attorney). Our state is attorney driven (Illinois).
I use a Maximum Offer sheet which includes all of my cost so I know how much I can offer. Don't forget to include profit. This is one of the common mistakes where investors forget there profit. Profits range quite dramatically. Some say 15,000 is ok while other will say not less than 50,000. Once again market conditions can drive this.
On flips you are creating forced appreciation. You are making the increased value of property. On rising markets you are in the drivers seat, while in a decreasing market be careful. Remember to pay attention to trends. Rising or falling.
Its a great time to begin. Wish I would have started sooner myself.
Have fun and good luck.