All Forum Posts by: Joe Finnegan

I may be a bit conservative on the repair costs, however this particular property needs some mold remediation (basement), kitchen and bath updates and standard paint/carpet. It might not be the best example, but properties that need less are priced higher, and the "delta" seems to wind up being about the same.

I haven't made any offers yet because 1. I'm still a bit unclear as to the offer "etiquette" when dealing with a bank. How low is too low?
2. Not convinced I can turn the property around due to the fact that there are so many REO's in the neighborhood.

Thanks for the responses.

Edit: FYI. Around here the low to mid $200k price range is a working class neighborhood. Lots of extended families under one roof etc...

I've looked at about 30 REO's and short sale homes in modest close-in DC suburbs. Homes in these neighborhoods are going in the $200k - $300k range. Not only have I not found anything where the numbers work (rental or flip), I'm not really getting that close (i.e. would need to buy at $135k on a $225k asking price and estimated $270k ARV with $50k in repairs). So far, the numbers are working out about the same for everything I've looked at. Some of the houses have been on the market for over a year.

Having said all that, I don't know if it's a good neighborhood to be jumping into. Almost EVERY home on the market in there is a short or a REO.

OK. I think I understand. It's 70% of ARV and then you subtract repair costs. I think I reversed the order. I'm guessing at the rehab costs since my contractor hasn't seen it yet. My gut tells me it will actually be closer to $40k, but I'm trying to be conservative as a newbie. Although, I guess I could "conservative" my way right out of a good deal ...

I might be a tad conservative on the ARV also. The closest comp I saw is listed at $299. I converted that to an ARV of $270 for a "quick sale". Is that a bad strategy?

Some folks on here report that they make deals on REO's at 50-60 cents on the dollar. Is that 50-60% as compared to ARV, asking price, or market value?

Just doing a test run on my understanding of the "Rules of thumb" and math skills. Looked at a few properties today and it appears that a flip is more realistic than a rental for them.

REO List price $225,000
ARV $270,000
Needs $50,000 in rehab

As a flip analysis looks like:
$270k-$50k= $220k
$220 x .7 = $154,000 purchase price

As a rent:
Rent $1800/mo
Expenses: $900
Rehab: $50k
Mortgage: $800 ($100 pos cash flow assumption)
Required purchase price: $70,000

I'm looking in Silver Spring, MD. In an attempt to make my original post concise, I left out a few details. I'm actually going to look at 8 properties. Some on the market for as little as 5 days and one over 400 days (35 days on the mls). 1 or 2 of them might be short sales.

My strategy is to hold and rent. I'll flip if the numbers work.

Thanks for the welcome and the steer to the Military group, I just joined!!

I was pretty much a defacto landlord. We owned houses in 2 places that we were stationed. Didn't sell because we were sure we'd go back (DC and Jax, FL). Had both places rented out at various times with not much concept of cash flow etc... I guess it didn't matter too much at the time since our motivation was to maintain property we expected to occupy in the future.

I'm shopping REO's and wondering about offer strategy. I've seen posts here that suggest that REO's can be had for 50% of asking price. Another post implied that you might be "black listed" if you routinely made extremely low offers to banks.

I'm going to look at a few REO's tomorrow (several on the market for well over 100 days). I understand the 50% rule for a rental, and I can factor in rehab costs. How do I formulate my offer?

Hi all,

I've been reading posts here for the past 3 days and decided I needed to join. I'm looking to get into real estate as it's the only decent investment vehicle left.

I have a little experience as a landlord from my military days, but currently my residence is my only property.

I'm looking at REO's and shorts as potential rental properties. Might do a flip if the right deal presented itself.

Glad to be here, I have lots to learn. I don't know what I don't know....