Evaluating Houses and Making Offers in Columbia, SC
70% of ARV - (Repairs + Assignment fee)
This I understand, however those of you in Columbia, Sc or surrounding areas would you say our market calls for a lower percentage of ARV? My partner has MLS access and I have FreedomSoft so we have no problem pulling accurate numbers. I'm considering evaluating houses at 60% of ARV to make deals more appealing and make buyers act quicker. However I do not want to leave piles of money on the table. Any suggestions?
Most Popular Reply
This is a good strategy
If you want to really get it, stick to the 60% ltv.
When I first started as a real estate investor i would think like a Hard Money Lender.
It was my experience that Hard Money Lenders we hard on Values and fix up costs.
So do this:
In your pursuit of property: Under estimate value and over estimate fix up costs
Example:
House has a value of 100k ARV (Really 110k to 115k)
Purchase price: 40k
Fix up costs: 15k (really 10k) (remember overestimate fixup costs)
Assignment fee for me on this deal: 5k
1. My investor (end buyer) sees the numbers, comps, pics etc
2. He sees 10k in repair but knows how over estimate fix up costs so he/she aren't caught off guard with repairs.
3. Knows I am hard on Value and he/she knows based upon my comps property is really between 110k to 115k
4. I send investor pending sales in the area as well as sold comps so that can see how the area is trending.
5. Its a solid 5k for me. maybe even 10k cause i set it up in a way that everyone wins
*The seller sells his/her house!
*End Buyer gets a deal he can fix and flip!
*I make 5k solid, maybe 10k!
Everyone wins!