Please help.

[Brandon Proctor]

Hello again BP!

Earlier today I spoke with a potential seller on a property that she is currently renting out.  She stated that the property has been stressing her out and that its a big headache.  I told her I would be willing to purchase the home from her and followed by asking whats the minimum price she would take for the home.  She states that she bought the home for 63k and she added an extra room to the property.  She figures its worth about 10k more with that one extra room so now she is at 73k....asking.

I have a real estate agent who just sent me comps of homes that are on the same street as the prospect's home.  The homes are ranging from 120k to 189k.  I am going to look at the home this weekend with a General contractor friend of mine. 

My question is using the 70% rule figuring the ARV for the home would be $150,000 * 70% = 105,000 - 15,000 in repairs, comes to 90,000. So $90,000 would be the highest the end buyer should pay for the home correct? For myself to make a profit I need to get the price lower than 90k obviously. With all that being said 90k minus 73k (sellers asking price) would come out to be a 17k profit correct?

Please let me know if I'm missing a step if my math is totally wrong.

[Jerry W.]

@Brandon Proctor  your math is right.  You need to check and make sure the comps are similar bedroom/bath size, and same with square footage.  Keep in mind your price calculations are for a flip house as compared to a buy and hold rental.  You can sometimes make more money selling to a buy and hold as the 70% rule is not as important as cash flow.  What are comparable rates on similar rentals in the area?  Just my thoughts.