Attorney , How much should I pay for this house?

E 'likely to answer this question for a couple of times someone week. The problem is that currently have a good formula for determining the remuneration and that can still make a profit are so afraid to make an offer. Heres what we are for single-family homes:

L '(MAO), offer the maximum allowable is calculated by first determining what is the house after the restructuring of value - the ARV () for the fixed value, less the dollar rehab, fewer requests for purchase / sale / Hold ( B / S / H) costs, lower profit margins.

MAO = ARV Rehab B / S / H Profit

How can you break a little 'later. To determine the ARV, study comparable sales data. Comparable sales are the properties that are sold in the last 6 months to 1 year, and within 1 mile to the house subject. However, other factors must be taken into account. The characteristics that distinguish the characteristics that are more similar, the data no longer valid. Make sure that the house in square feet, bedrooms and bathrooms, age, style is similar, and architecture. Do not worry about the condition, if the amount of dollars needed to affect rehabilitation. Next look at the neighborhood and the way individual. They look the same? Or is the comparable property on a beautiful street while the subject property is located in a street full of empty strewn rose and many houses? The goal is to see the potential of investments, as the end of the house occupants. If you could buy your completed investment on the bad road or a beautiful house on the street, both for $ 150,000, which they choose? The other house, of course. That is, your house is not worth the same, it must sell at lower prices to win a buyer.

Dollar Rehab differ from innovators innovator, depending on whether it is economic to do the work yourself, or use subs, or use an expensive general contractor. The scope of work should be the same, it is necessary to look to make comparable investments such as houses (unless the plan is) to sell well below market value. We are not looking at all the contractors of various offers, if we want to make informed bids. All offers, the real would be sold before they set me an offer! Instead, we have developed enough on the rehabilitation of dollars for the general condition of the apartment. It is an exact science? No, but that the offers will always miss something. So why not with a guide that probably 90% accuracy and allows for quick offers?

Buy / Sell / Hold costs include expenses such as appraisals, legal fees, title search and title insurance, cost of lending, debt service, utilities, insurance, taxes, real estate commissions, taxes and closing, on behalf of the buyer end. Again, costs depend on the individual circumstances individual investors. In the Atlanta area, apparently 15% of the ARV for a good average budget of B / S / H costs. If you are the innovator, you can calculate your specific B / S / H cost, then use the percentage of future offers.

The profit margins are the fun part of the equation. How you doing? If you're wholesaling the property, you also want to consider as you leave the company to make the buyer investor, the deal attractive.

Thats it. Thats how to calculate the more you pay for a property. But this is not what you pay. It is the highest you'll pay. And 'the deal-breaker. You do not pay a dime on MAO. Your negotiations should lead you so far below the MAO possible. The difference is the amount of extra profit in your pocket. What should you pay is the minimum price below the MAO that the seller accepts

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