All Forum Posts by: Ken Siew

What would your buyer pay for a deal like this?

I'm happy that you didn't get hung up on this one single deal. This is a marathon, you'll be working at thousands of deals eventually, so this is just part of the process. Bottom line is as long as your buyer is okay with the price, it doesn't matter what % of ARV it's at.

Kimberly, great job finding a motivated seller! That's a big step forward :-)

I don't know about the 70% rule, but all these rules (2%, 50%, 70%) are just guidelines for you to get a quick sense of a deal potential. When it comes down to the real thing, you have to get specific down to the dollar, especially when you're first starting out. You're doing real business here, not a random fun analysis game.

Sounds like you're trying to wholesale this deal to your landlord buyer, so what you need to know before you make an offer is to know what your buyer is looking for (assuming it's a property located in the neighborhood he wants):

1) How much of a discount off ARV will he accept?

2) Is he okay with repairs of $17k. Usually fine, but some buyers don't want to deal with anything more than $10k for example.

3) What's his price range? The price sounds acceptable in most markets but you'll never know. Maybe he's out of money right now.

There might be additional questions depending on the deal, but the takeaway here is to understand exactly what your buyer wants. You know what, he might be okay with 85%-90% ARV if your market is really hot! And that's happening in many markets across the country.

When I'm in doubt, I'd take ARV x 65% - Repairs, that's usually a very good deal for most investors (flippers specifically). And I suppose 70% would work too in the current environment :-)

Jivonna, just keep making the offers on properties with potential to be accepted (needs work, TLC, etc). Vacant homes could turn out to be great deals also, as some owners live out of state and may want to sell off the properties fast. Anyhow, assuming you're building your buyer's list, then just keep looking for that deal. Never give up, and you'll soon find the gold :-) Good luck!