All Forum Posts by: Kit England

Most fix and flip investors are going to want to be into the property at about 70% of ARV after all the repairs have been done. If the $170,000 is accurate that would be $119,000, less the cost of repairs. If your information is right and it only needs painting (the minimum of what would have to be done), and let's say some carpet, you may still be looking at $5,000.00 or so for repairs, bringing what the rehabber would want to pay for it down to $113,000 or $114,000. Then there would be whatever you would want for your wholesale fee. Let's say that would be $5,000.00. Now, you would be at about $98,000 to $99,000 as the maximum you could offer to pay the seller for the property. If the sellers estimate for ARV is incorrect, or it actually needs more repair work than thought, those numbers could be more or less. A likely scenario would be that the flooring, kitchens and baths may need some work if it's an older home and the floors and those items haven't been updated since the home was built. Kitchen and bath work can get pricey pretty quickly, as can flooring. A buy and hold investor will probably be able to get away with putting a little less money into the repairs/upgrades, allowing them to buy for a little more which means you could pay the seller a little more or make a little better wholesale fee. As the others have suggested you need to find out the accurate ARV and repair estimate to proceed, everything relies on those numbers.

Welcome to BP Chris.

Greetings Ernesto

It would definitely be completely negotiable. For arguments sake, lets just say that you spent the time to pre-qualify those leads, the seller is definitely ready to sell their property, more importantly, ready to 'list' their property with this "best agent in town" that you just happen to know and lets say you even set an appointment for that great agent while you still have that seller on the phone. All that listing agent has to do now is make the appointment and sign-em-up. I bet you could arrange a 50-50 split "marketing fee" on that listing agents 3%, day in and day out on those kind of leads. Disclaimer: marketing fees paid by realtors cannot be determined by the sum of the sale of the property. I'd probably want to 'actually' be working with the best listing agent I could find "best agent in town" if I were doing that. One of those agents that doesn't let opportunities, served up on a silver platter, like that get away. If you wanted to be less proactive and just wanted to give the Realtor a name and number and say "good luck", that lead would be worth considerable less to that agent I would imagine.

Hi Nate. You actually need to know the 'NET Operating Income' or NOI number That would be your GROSS lease number of $5,500.00 less vacancies and expenses. Once you have the NOI (Net Operating Income) you can divide that by the cap rate to get the current property value result.

Example: 

Let's say that vacancies and expense on that property are $1,500.00. $5,500 (Gross Lease Income) - $1,500 (Vacancies & Expenses) = $4,000.00 (This would be the NOI)

$4,000 (NOI) / .08 (CAP RATE) = $50,000.00 (Property Value)

Hi Greg. You could partner with a listing Realtor to get a "marketing fee" for those unmotivated/ "I need retail dollars" leads you refer to them. Partner with an investor that that specializes in flipping sub-to contracts for properties with little to no equity, or partner with a buyer Realtor that can bring a buyer that would otherwise not be able to qualify for a loan due to the current stringent lending criteria. That could end up being a 4 way win/win/win/win with the seller/you/Realtor/buyer all walking away happy. Or, you could market for and find that buyer and sell them that contract. Sell leads or deals to other investors that may be looking for something other than what you're looking for. Possibly an assignment of the mortgage.

Welcome to BP Patrick. Good luck with your real estate investing and thank you for your service.

Thank you very much Tyler. I was just browsing some of the forums. There is so much great information here.

Thank you Tristan & Michael for the warm welcome. Much appreciated.

Wow, less than a month for the $75,000 rehab. Very impressive. Good luck.