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Real estate > Real Estate, How Much Should I Pay For This House?

Real Estate, How Much Should I Pay For This House?

by: Lou Castillo

We probably answer this question for someone a couple times every week. The problem is that they don?t have a good formula for determining the most they can pay and still make a profit ? so they?re scared to make any offer. Here?s what we use for single family homes:

The (MAO) Maximum Allowable Offer is calculated by first determining what the house will be worth after renovation - the ARV (After Repaired Value); less the rehab dollars required; less the Buy/Sell/Hold (B/S/H) costs; less profit margins.

MAO = ARV ? Rehab ? B/S/H ? Profit

So let?s break that down a little further. To determine the ARV, study comparable sales data. Comparable sales are those properties which sold in the last 6 months to 1 year, and within ? to 1 mile from the subject house. But other factors must be considered as well. The more characteristics between the properties that are similar, the more valid the data. Make sure that the house itself is similar in square footage, bedrooms and baths, age, style, and architecture. Don?t worry about condition except as it will affect the amount of rehab dollars required. Next, look at the neighborhood and the individual street. Do they look the same? Or is the comparable property on a beautiful street while the subject property is on a street riddled with empty littered lots and boarded up houses? The point is to view the potential investment as your end homeowner occupant will. If they could buy your completed investment on the bad street, or a house on the beautiful street ? either for $150,000 ? which would they choose? The other house of course. Which means your house is not worth the same ? it must sell for less to attract a buyer.

Rehab dollars differ from renovator to renovator depending whether they do the work themselves, or use cheap subs, or use an expensive general contractor. The scope of the work should be the same ? it is whatever is required to make the investment look like the comparable houses (unless the plan is to sell well under market value). We do not attempt to obtain all of the various contractor bids when we are making offers. All the real deals would be sold before we?d ever have an offer together! Instead we?ve developed ranges of rehab dollars based on the overall condition of the home. Is it an exact science? No, but neither are the bids ? there will always be something missed. So why not work with a guide that is probably 90% accurate and allows for quick offers?

Buy/Sell/Hold costs include expenses such as appraisals, attorney fees, title search & title insurance, loan origination fees, debt service, utilities, insurance, taxes, real estate commissions, and closing fees paid on behalf of the end buyer. Again, these costs vary depending on each investor?s individual situation. In the Atlanta area, 15% of the ARV seems to be a good average allocation for B/S/H costs. If you are the renovator, calculate your specific B/S/H costs, then utilize that percentage for future offers.

Profit margins are the fun part of the equation. How much do you want to make? If you?re wholesaling the property, you also want to consider how much you should leave in the deal for the investor buyer to make the deal attractive.

That?s it. That?s how you calculate the most you?ll pay for a property. But that?s not what you SHOULD pay. It is the maximum you?ll pay. It is the deal-breaker. You will not pay one penny over the MAO. Your negotiations should lead you as far below the MAO as possible. The difference in amounts is additional profit in your pocket. What you SHOULD pay is the minimum price below the MAO that the seller will accept.

We call this the MIN-O.

Have a rich week,

Lou

About The Author

Lou Castillo

FREE! Real Estate Investing Secrets To Earning $100,000 Your 1st Year! -- 11 Overlooked Real Estate Statregies That Will Turn Your Investing Business upside Down And On The Fast Track TO Success...Guranteed! Plus A Bonus Track With A Secret So Successful It Can Double Your Investing Income Overnight!

http://www.InvestorSuccessTactics.com

josh@joeandlou.com

The Basics Of Estate Planning

The Basics Of Estate Planning

by: Robert Thatcher

Estate Planning may be a word that is encountered by many citizens especially the elderly. What is Estate Planning? What benefits does it provide to people?

Estate Planning is a method of arranging and considering alternatives that will satisfy specific wishes and goals to prepare for things that may happen to a person and the people he finds special to him.

Estate Planning includes organizing properties and not just putting them in a simple Will. It also lessens the taxes and fees that may possibly be charged to these properties. Estate Planning also includes contingency preparation to ensure that ones wishes regarding health care and medications will be followed.

An estate plan may be described as good if it financially coordinates with the future of the home, business, investments, insurance and other benefits if ever the person becomes sick or will pass away. A good estate plan...

The Basics Of Estate Planning

Real estate > The Basics Of Estate Planning

Condominium and Fee Simple Ownership of Real Estate

by: Roselind Hejl

Real Estate Ownership

Generally, apartment-style buildings are called condos, two-story row houses are known as town homes, and free-standing homes on small lots are referred to as garden homes. Unfortunately, this description creates some confusion about real estate ownership. Apartment, town home, and garden home describe the design or construction of certain homes. The word "condominium" does not refer to a the layout or style of a building. Condominium is a form of ownership of real estate. The form of ownership of real estate cannot be recognized by observing the building design.

Condominium Regime

The legal definition of condominium is: the absolute ownership of a unit based on a legal description of the airspace the unit actually occupies, plus an undivided interest in the ownership of the common elements, which are owned jointly with the other condominium...

Condominium and Fee Simple Ownership of Real Estate

Real estate > Condominium and Fee Simple Ownership of Real Estate

For Sale By Owner: Priming the Real Estate Pump

For Sale By Owner: Priming the Real Estate Pump

by: Chris Robertson

Perhaps you've decided to relocate. Or maybe you've outgrown your home and need to find homes for sale that will accommodate your growing family. Or perhaps your children are grown, you've made the decision to downsize, and are in the market for real estate that will better suit your needs. Or maybe you've decided to take the leap, buy some land, and build the home of your dreams. Whatever the reason, you need to sell the home you currently own, and you've decided to bypass real estate agents and go the "for sale by owner" route.

Before taking the plunge and listing your home, there are a number of steps you should take in order to increase your home's market price and save yourself future hassles.

Just as you would dress appropriately to make a good first impression to those you meet, you want your home to make a good first impression on potential buyers. This means...

For Sale By Owner: Priming the Real Estate Pump

Real estate > For Sale By Owner: Priming the Real Estate Pump

Selling Real Estate on eBay

Selling Real Estate on eBay

by: Dan Farrell

Selling real estate over the internet may sound like an awkward idea. However, the exposure the real estate receives over such a widespread media like the internet is every realtor?s dream.

Can eBay be used to market real estate? The answer is a resounding ?yes!?

eBay provides functionality that is clearly adaptable to the needs of most realtors. It provides a widespread medium of advertisement for the real estate. It is also a relatively inexpensive method of advertising.

One of the best things about selling real estate on eBay is that it "markets" to many areas around the world, not just a local area. Advertising on eBay makes the property available to more than 100 million potential buyers, including those from other countries. Visitors can browse through the property details 24 hours a day, 7 days a week ? all without the realtor having to explain the details about the property to every...

Selling Real Estate on eBay

Real estate > Selling Real Estate on eBay

Real Estate Post Card Marketing; Million Dollar Mailings

by: Lanard Perry

Real Estate Post Card Marketing is an underutilized

real estate marketing strategy known by many, but used

by few. The test? How many agents do you know market

real estate with postcards. Not many - that's what I

thought!

Yet, those that do maintain high visibility with their

prospects. From useful tips to delicious recipes,

customized real estate marketing post cards can leave

positive and lasting impressions about you and your

services at affordable prices.

I like marketing real estate with post cards for

several reasons:

They're inexpensive - you can cast a wide net and

reach a lot of people for a little of nothing. And as

you know, or will soon learn, repeat contact with

prospects is key to identity branding.

You want buyers and sellers...

Real Estate Post Card Marketing; Million Dollar Mailings

Real estate > Real Estate Post Card Marketing; Million Dollar Mailings

Real Estate Investing - Writing Killer Postcards to Attract Motivated Sellers!

Real Estate Investing - Writing Killer Postcards to Attract Motivated Sellers!

by: Lou Castillo

So many of you have been telling us that you're ready to get started investing, but "you can't find any deals! and what are the steps and secrets to finding great deals?" Some of you have even written asking us if there still ARE any deals left? OF COURSE there are! We find them all the time. But you ain't gonna find them looking at for-sale ads in the paper, for-sale signs in the yard, or by concentrating solely on short sales, foreclosures, REOs and agent-listed properties.

You need to dig out the motivated sellers from under the rocks where they hide, and get THEM to call YOU!! Imagine how stress-free and easy it is to earn a huge income when real, genuine motivated sellers call you and you can pick the best deals out of your calls. It really is like shooting ducks in a barrel.

Alright?enough already! Now you're wondering : how can you get...

Real Estate Investing - Writing Killer Postcards to Attract Motivated Sellers!

Real estate > Real Estate Investing - Writing Killer Postcards to Attract Motivated Sellers!

Real Estate, How Much Should I Pay For This House? student loans Real estate

Finding Cheap Hotels

by: Hugh Goble

Cheap hotels for your travels can be easy to find if you know where to look. In every town there are cheap hotels that can make the difference between having a vacation or not. Where should you look for these hotels? Accommodation costs are a significant chunk of the total vacation expenditure and by staying in cheap hotels vacationers can afford to experience more of what a holiday destination has to offer.

Start by...

Real Estate, How Much Should I Pay For This House?

Real estate > Finding Cheap Hotels

Lens Flare - The Hidden Enemy Of Rear-Projection TVs

by: Eli Aloisi

While one expects CRT-based rear projection televisions to deliver good black levels, there is a factor that can compromise black level performance in any rear-projection display.

This factor is something called lens flare. Lens flare is most commonly seen in photographs. It usually occurs when the photographer is shooting in the general direction of the sun. Bright sunlight enters the...

Real Estate, How Much Should I Pay For This House?

Real estate > Lens Flare - The Hidden Enemy Of Rear-Projection TVs

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Real Estate, How Much Should I Pay For This House? Real estate

Real Estate, How Much Should I Pay For This House? tires Real estate