All Forum Posts by: Sarah Ottesen

@Greg H., can you tell me what you mean by "net bid".

Thanks,

Sarah

Thank you @Janette Olano

This post is a bit old, but I am just starting to learn about HUD homes and when doing a search in the forums found this post to be helpful!

Greg (or anyone else), can you tell me where the listing price is located on the "bid results". I see what, I believe, the final offer was, but I can't find the listing price to calculate the percentage. Or maybe I just use what the estimated market value would be? I am trying to find out what kind of % HUD is accepting for homes in Eastern Iowa (Cedar Rapids, Waterloo, Dubuque). Thanks!

@Lou Ruggieri :)

I tried to run some numbers, but I made a lot of assumptions on cap ex and maintenance.  In the end, my numbers are with Jim, 12-unit or both!  Again, I am making some assumptions.  Here are my numbers:

Deal #1: 6 unit

Purchase Price: $435,000

25% Down: $108,750

Gross Income: $67,332

Utilities/taxes & Insurance: $8,121

Mortgage: $21,000

Vacancy (10% of gross income): $6,733

Property Manger (10% of gross income): $6,733

Capital Expenditures: $7,286

Maintenance (25% cap ex): $1,822

---------------

Yearly Cash Flow = $15,637

Cash ROI (yearly cash flow/down payment) = 14%

********************************************************************

Deal #2: 12 unit

Purchase Price: $418,000

25% Down: $104,500

Gross Income: $117,924

Taxes (did not see in expenses): $2,024

Insurance: $3,815

Utilities: $15,260

Mortgage: $20,195

Vacancy (10% of gross income): $11,792

Property Manger (10% of gross income): $11,792

Capital Expenditures: $12,954

Maintenance (25% cap ex): $3,239

---------------

Yearly Cash Flow = $36,853

Cash ROI (yearly cash flow/down payment) = 35%

@William S., I didn't see any mention of ROI in the previous posts (maybe I looked over a post or two). But this is something to definitely consider. I like to see an ROI of 12%, this is because, most likely, you can invest your money in a mutual fund that will get you that. Maybe your rule will be 10% or maybe it will be 15%, just pick a % that you are comfortable with.

If you can get your said property for $10,000 cash (this could be a downpayment), With my ROI rule, 12%, I would be happy with the return of $100 per month (1200/10,000=12%). If I had a SFH that was getting $250 cash flow, but I had $35,000 invested, I would not be happy because, though it appears to get great cash flow, my ROI is only 8.5%. (250*12 months=3000/35,000).

@Jared Althoff I sent you a PM as well.

When we were making our offer, our realtor suggested that we put it in our offer letter as a contingency.  To be honest, though, we didn't do it.  This was probably because of the excitement of our first deal and just forgetting about it.

Thank you for the input @Patrick Donovan.

Buy one more