Making offers in Stockton California-Central Valley

[Patrick Martinez]

My first direct marketing campaign in Stockton California is yielding leads. The absentee owners I have spoken with stated that they are willing to discount for a cash offer but I have a question.

In your opinion should I stick to the 70% rule or because we are in California should I start at 70% of ARV when making an offer and let them counter until 80% of ARV is reached?

I have spoken to three local RE investors and they told me they have bought at 80-85% of retail and they were happy with that number, one of them even bought at 90% and still made a profit when he sold! So far the properties I have seen are not vacant or in need of major repairs.

I don't want to offer too low and blow out a potential deal because of guidelines that may not work in my area of the Central Valley.

Iv'e read the opinions of the heavy hitters from Southern California (Tim G, Aaron M). Wendell De Guzman also had an interesting post about violating the 70% rule.

I'm thinking that maybe I have not spoken with true motivated sellers? They said some of the key words that caused me to pursue the lead and check out the properties (Want to sell for cash, don't want to list with a realtor, tired landlord)

Your thoughts and opinions would be appreciated.

@Tim G
@Aaron Mazzrillo
@J Scott
@Kyle J
@Jerry Puckett

[Brant Richardson]

It depends on how much the ARV is. The 70% rule is to offer 70% of ARV minus the necessary repairs. So a house with an ARV of 50k will only give you a 15k profit, too thin. An ARV of 100k will give you a 30k profit, much reasonable more. 500k will give you 150k profit, the seller will be mighty hard to find. To me, trying to use this rule doesn't make much sense. I would think more along the lines of what is the minimum amount I am willing to make in a deal plus a safety margin. Then do ARV minus that amount, minus repairs. If there is a typical price in your area you could come up with a %rule that works for you.