After a couple of weeks, the agent got back to us and told us that the buyer who offered $50K could NOT qualify for the loan for the property so we should resubmit our offer. We tried to offer $45K but the bank countered back at $47K (which from the last update, we said would be the price we can live with to NET $15K).
During this time, we will look at the deal in details and make sure that we can realistically make a nice profit. We will need to do some thorough inspections of the house as well as the roof and determine what the extent of the damage is so that we can get a tighter grasp of the repair costs.
Moral of the Story: Know your ARV, Repair Costs, Closing Costs, and an acceptable NET. Work Backwards and determine a MAX Price you can pay for the property and stick to that price. There's always another deal...
Going down Memory Lane, here's how we calculated the MAX Price to pay:
Example Calculation to determine (What's the MAX you can pay for this property?):
ARV: $80,000 (This can be a little tricky so do your homework!)
Repair Costs: - $10,000 (Unexpected expenses can eat up all your profits)
Closing Costs: - $8,000 (Add closing costs and REALTOR commissions)
Want/Hope to NET: - $15,000 (Make sure this NET is worth your time)
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MAX you can pay: $47,000
UNTIL NEXT TIME...
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