What Do You Think About These Deals???

Question

At last! I think I have found 3 properties that I am interested in making offers on. I will give you a brief description of each. I would like your feedback on what you think about the deal.

NOTE: I am going to be getting these under contract and then assigning my contract to other investors.

Deal #1:

Vacant SFH
4 BR/2 FB
1,482 SF Enclosed Area
Land Area: 5,000.00 SF

Asking Price: $230,000
Potential Purchase Price: $195,000
After Repair Value: $282,562
Repair Value: $17,000
Equity/Spread: $70,000
Assignment Fee: $10,000

Deal #2

Vacant SFH
4BR/1FB
920SF Enclosed Area
Land Area: 9,628.00 SF

Asking Price: $199,000 (already being sold $40,000 under value)
Potential Purchase Price: $180,000
After Repair Value: $261,601
Repair Value: $17,000
Equity/Spread: $64,000
Assignment Fee: $10,000

Deal #3

Vacant SFH
3BR/2FB
980 SF enclosed area
Land Area: 8,280.00 SF

Asking Price: $215,000
Potential Purchase Price: 190,000
After Repair Value: $315,000
Repair Value: $10,000
Equity/Spread: $115,000
Assignment Fee: $15,000

I look really forward to your opinions, suggestions, or thoughts, or simply, an approach you would take. I am planning on making these offers to the realtor tomorrow.

Thanks again!

Amy Vasquez · Answer

Did nobody break out with their calculators or am I just crazy?  Seems like the only good "potential purchase price" is on deal 3.

I am curious as to why deal 3 has the ARV calculated down to the EXACT dollar?  Did you have some sort of averaging formula using the comps?

Here's what I see:

Deal 1 
$282562 ARV
$197793 (70% ARV)
$17000 less comps
$180793 PURCHASE PRICE (PP of 195=too much)
And that doesn't take into account the 10k assign fee.

Deal 2
$261601 ARV
$13120 (70% ARV)
$17000 less repairs
$166120 PURCHASE PRICE (PP of 180=too much)
Again, assign fee not factored which makes it worse.

Deal 3
$315000
$220500 (70% ARV)
$10000 less repairs
$210500 PURCHASE PRICE (PP of 190 with be AWESOME!)
Assign fee not factored but I'd want to buy this from you if you are in AZ.

I hope I am not coming off as harsh, I just really want to know and learn

N/A N/A · Answer

Those deals calc out right to me, I'd get them under contract quickly if I were you. May I ask where you found these deals? Not locations so much as sources of info you used to find them. Cheers. Good luck on these three deals.

Amy Vasquez · Answer

so, Ewilliams, what state ARE you in?

jbalinvest - I wasn't trying to attack you.  Just trying to be very clear.  Hope I didn't come off wrong.

N/A N/A · Answer

no worries excitingname. I realize we all have our formulas. I probably should've clarified the numbers before assessing the deals.

N/A N/A · Answer

Thank you everyone for your comments; I really appreciate it! Deal #3 it is!!!

N/A N/A · Answer

I am in the lovely crab state of Maryland

Amy Vasquez · Answer

You stated 
ARV = FMV - repairs.

It should be 
ARV = FMV

The After Repairs Value is what the eventual selling price is expected to be based on the comps. The value is what it is.  Repair costs are not factored into determining this SELLING price.

Repair costs are only used to determine the BUYING price. My formula for buying is to pay 70% of what the house will sell for less repairs. (IE 100k house would have a max purchase price of 70k if no repairs needed.  If it needed 10k in repairs, the max purchase price would be 60k)

In looking at buying these deals from a wholesaler, the only one that makes sense to me using that formula is deal #3

N/A N/A · Answer

Well my calcs actually were at .75 ARV, and that usually includes your 10% cut, thought that's just from my standard calcs, though thats to get in the ball park. Also, the ARV should be after the repair costs are added into the equation already. remember ARV = FMV - RC(repair costs). If EWilliams didn't do that, then he's listing the ARV incorrectly, it should be FMV instead.

N/A N/A · Answer

Well I was just trying to help. The way my calcs usually go is to have ARV = FMV - Repairs. This is due to the fact that I calc all the percentages off of the buying price, as you said, which is the only time when you factor in the repairs. I just calced the variables incorrectly since I didn't know which variables meant what and I probably should have clarified that with you. I just used the calculations I'm used to. And yes, using that set (since the ARV did not include repairs cost), the only real deal is deal 3.

Richard Warren · Answer

I would be wary as well.  If these are great deals why are they sitting on the MLS?  That being said, I have gotten good deals off of the MLS by offering only what I was willing to pay regardless of what the seller was asking.  If the seller is ready to face reality or needs to sell quickly you can do OK.