All Forum Posts by: Matt Hudson

@Max T. - In the original offer I gave myself a $4k cushion in case of extra repairs. 

@Theresa Harris - Like I told Max above the $4k buffer just in case. The ARV increased because I was less conservative with the $/sqft. Instead of going $65/sqft (which is the low average $/sqft) I bumped it up to $70 which is more like medium-low in that area. The overall average is $85-90 for similar properties however this street is a little rough still and won't warrant that $/sqft.

@Brandon Roof Good mindset! That counter offer is the max I'd be willing to go. I'm having my contractor go out there today to walk through with a fine tooth comb to get an exact rehab estimate. I'll know more once that happens. Again, thank you!

@Brandon Roof

You're exactly right about moving the goal posts! I 100% agree. I'm just trying to gauge whether I'm being overly conservative. The sellers agent said they'd entertain offers at sub $75k and will certainly not get $100k for that property. I appreciate your insight. 

I made an offer on a home and we were just informed they have a higher offer. Below is an overview of the details. Should I raise my offer?

Listed at $100k. The home is on a sketchy street but every street around it is turning around. This makes pulling comps very difficult. Average comps in the market are between $85-90/sqft. However, in this area some houses are selling for much less as investors buy them an flip it. In an effort to be conservative and to not get blindsided by a low appraisal I used the low average of $65/sqft to calculate an estimated ARV.

OFFER #1:

Offer: $62,500

Repairs: $14k

All in: $78,600 (with closing costs)

ARV: $98,280 ($65/sqft x 1512 sqft)

Refi (80% LTV): $78,624

Below is the potential counter. $70k max offer and lowered the reno cost. The above had a cushion in case of unexpected repairs. I also raise the cost/sqft to $70 which is now a medium-low price/sqft in the area.

POTENTIAL COUNTER:

Offer: $70,000

Repairs: $10k

All in: $84,100 (with closing costs)

ARV: $105,840 ($70/sqft x 1512 sqft)

Refi (80% LTV): $84,672

@Waylen Herdman

I house hacked my first house I bought while in college at MTSU. I was working full time and going to school. Had a buddy that had graduated a couple years ahead of me and went into the mortgage business. Back in 2001-2 they'd give anyone a mortgage. I bought a 3/2 in Murfreesboro and rented 2 of the room and eventually rented the 3rd room (my room - the master bedroom) to my girlfriend now wife when she moved in. It paid my mortgage and cash flowed. The only difference in house hacking a SFH versus a Multi is in a SFH you have to live with the renters and deal with whatever mess and drama they come with.

@Luka Milicevic - Thank you for your input!

I looked at homes sold in the last 6 months, of similar size, in the same neighborhood and came up with a $209.18/sqft. The trim levels of these homes were better than a rent ready flip so I decreased the projected ARV to $175/sqft. I then asked my contract (who also in an agent and wholesaler) and my agent for an ARV. They independently told be $360k ARV or $194/sqft. Granted the numbers above look fantastic because the property will likely go for much more than $180k+ because there are many offers on the property. How would you advise me to pull the most accurate comps?

When you say you can find the deal above but not in foreclosure or auction. Where exactly are you finding deals like the above?

I feel more comfortable analyzing this deal then the previous 30 I've analyzed over the last couple weeks. I have plenty of reserves but would certainly not over extend myself for one house. 

Escalation clause sounds like a fantastic idea! Hypothetically lets say I'm willing to pay $166k. Should the escalation clause read something like "We'd like to make a full price offer of $145k with an escalation clause to go $1,000 over the highest bidder up to a max bid of $166k.". So if the highest bid is $145k then we'd win at $146 and so on until a $165k bid and we'd win at $166k. However, if someone bid $166k+ we'd lose the bid. Am I thinking correctly?

Also, how can I trust that they are telling the truth about the bid amounts?

@Tchaka Owen Maybe you can pick up Anthony on your way up to Nashville! We'll get a team of squatter removal specialists. Also, maybe you can get with BP to right the next book "How to Be Rid of Squatters".

I really want any property that numbers work. The numbers above are based on my max budget of $210k ($155k purchase + $55 Reno) for a purchase price. However, this property will likely go for more than $155k purchase price. The question is do I tap into my cash savings to purchase this one. Because the comps are so good I'm confident I could increase the purchase price 30-40k and still break even on a cash-out refi. However, that would entail me spending that in cash which I had not planned to do. Is this deal worth doing that? That is what I have to figure out...

@Brad Wayne Hello fellow East Nashvillian! You have a good problem here. I know how valuable your backyard is. A couple years ago I built a 3 car garage (DADU) with a 850 sqft apartment above it in my back yard. We currently Airbnb the apartment and it cash-flows like crazy! I wish I could give you input on splitting the lot but I have no experience here. I am curious though if the couple was a dark haired woman with a skirt and a blond-ish man both casually dressed. I ask because I was out for a run and saw them scoping out houses. Ran back by them and the woman was on the phone in front of a house for sale. Didn't look like thieves so I assume they trying to buy houses.  

@Anthony Dooley I appreciate your feedback! The estimated ARV matters to me because I'm wanting to cash-out refinance the capitol invested. Hopefully the estimated ARV will match the appraised value! My cash on cash ROI is infinity % as according to the math above I'd be getting back more than invested. In regards to lower priced property I've been looking outside of metro Nashville as there is not much to choose from sub $175k. It's not that far from Columbus to Nashville. If I get this house maybe you can drive up and have a conversation with the guy! Thanks again