Knowing how to do the numbers

[Toris Diggs]

I've studied several real estate courses went out with contractors and everything to learn how to figure out the numbers to know if its really a deal or not. I'm a numbers person. To me everything is just an equation. There's a formula for everything. Now I've been talking to other investors to work together try to get some joint venture deals together and one thing that I've noticed is that ALOT of these investors or supposed to be investors they either not really taking this business seriously and not doing their homework or they think that other buyers are stupid and just trying to get over. They either don't know how to do the numbers, the MAO, how to estimate repairs, or they not using the right comps. Because what I'm seeing is investors getting a property under contract for $50K, the AVR is $110K, and most of their repair estimates are way too low, and their trying to wholesale the property for $90K ???? And then they'll say oh its worth $150K and I'm like oh NO it's not? Where did you get these comps from because I'm familiar with that area and the houses in that area brand new only sell for about $110K-$120K at the most.

Comps = (H1 + H2 + H3) = Total /# of Houses

There not even using the basic formula for offers.  (ARV x .65) - Repairs = MAO 

Repair cost = (# of sqft  * Price per sqft)   Ex:  (House 2000 sqft * $15 per sqft) = $30,000 in repairs add another $3,000 for miscellaneous.  The cost of your repairs is determined by your area and area the house is in.  So if you talk to the contractors in that area you can pretty much get an idea of how much it will cost per sqft .   

minor repairs = $3 - $7 per sqft.     moderate repairs = $15- $20 per sqft     and major repairs = $30-$35 per sqft.