A great book on this herd mentality is Extraordinary Popular Delusions & the Madness of Crowds by Charles Mackay, and it was written in 1841!

Hi Charles,I'm holding all my deals as rentals, so I use both a cash flow analysis AND the 70% rule (I'm currently using 50% due to the downside risk in the market) to determine the price I can pay if the house is in good condition.

Originally posted by "charles whitaker":JCJR is on the spot.Also, you'll find that wholesaling a deal to a retail buyer(conventional financing) is frowned upon by banks.

Originally posted by "charles whitaker":I haven't met a single person that does this job well that saw it on TV and decided to start (rehabbing that is).

Charles,Do those numbers include labor or are they for materials only?

I am in Denver and have been investing for 3 years now...was doing a lot of fix and flip but the fip side of things has gotten tight here in denver. anyhow saw you were in virginia...are you close to woodbridge/ prince william (county)?

Originally posted by "charles whitaker":BTW, what are you spending 40K on, that sure is alot of money to go into a house and I know that sheetrock is not very expensive.

Citigroup's fourth-quarter profit will be reduced by as much as $7 billion because of losses from subprime mortgages, which led to the departure of CEO Charles O.

My cash flow analysis needs to consider....Cash Flow = Rent - Debt Service (Princ and Int) - All other expenses (est at 50% of Rent)So if you do a little math and want to figure a rough break even point on either the rent or the debt service, you can set cash flow = 0 and solve for one of the other variables.e.g. 0 = Rent - Debt Svc - 0.5 Rent 0 = 0.5 Rent - Debt SvcConcluding that .....Debt Svc = 0.5 Rent OR Rent = 2 Debt SvcSolving for rent will tell you what you need to charge given the acquisition cost of the home in order to break even.

So a fair offer close to what they want, plus interest (around 50/50 inter/ princ) on a 15 year more on a thirty if theyll go 30, lower payment for you.