Originally posted by "nephets":
I think the rule of thumb is 70% of the after repair value - rehab cost. So in your example, if you fix it up you find other comps in the neighbourhood go for 250K in the same condition. Lets say to get it to this condition it will cost you 50K. You take the 250,000 X 70%=196000. 196,000- 50,000repair cost=$146000 the price you should offer for the house. I hope this is clear.
Steve
edit; I just re-read your question... I don't think there is a percent of purchase price you shouldn't go over when figuring out if it is a deal or not when it come to repairs.
Thank you, I wasnt sure if it was 70% of the arv or the actual purchase price. I've never really done repairs before other than finishing my basement @ home, I dont have the $ to finance both houses @ once, so i'll go check it out, but the 1st property is hard to beat. A friend of the family called us before putting it on the market, old house, but sale price of 420k and land valued @ 400k, it's on the water front as well, the house does require some repairs, What do you guyz think of prefabricated homes? We could demolish this 1 and put up a prefab and sell it for a really good profit since the house would have more value than the old 1 in there, although the 1 there has it's charm with high celling and 2nd floor balcony on 2 of the 3 bedrooms. I planned on learning more before jumping both feet into REI, I registered for 3 classes on Real estate in septembre @ university, management, property evaluation and business negociation. So I'm a bit shor handed on REI knowledge. Let's hope for the best, I'll probably be picking every1's brain now and then! Both projects need alot of work, but the potential payoff is good, more than I make in a whole year...
Thanks,
Mathieu
