Aviation lawyer - Real Estate, what should I pay for this house?

Probably answer this question for someone a few times a week. The problem is that they have a good formula to determine the most charged and can still make a profit so scared, theyre bidding. Heres what we use for single-family homes:

L '(MAO) offer the maximum allowable is first determining what the house is worth after renovation - the ARV (After Repair Value) calculated, minus the dollars rehab required; less Buy / Sell / Hold (B / S / H) costs, less profit margins.

MAO B = ARV Rehab / S / H Profit

Learn how to break a bit 'over. To determine the ARV, study of comparable sales. comparable sales are those properties that sold in the last 6 months to 1 year and within one mile from home person. However, other factors must be considered. The main characteristics of the properties that are similar, the most valid. Make sure that the house like square footage, bedrooms and bathrooms, age, style and architecture. Do not worry about condition unless it will affect the amount of rehab dollars required. Next look at the individual district and the road. Do not look the same? Or is the comparable property for a nice road, while the Subject property is located on a street full of empty lots scattered and went home? The point is the potential investment as the house occupying the end will be considered. When you have completed your investment possible for the poor road or buy a beautiful house on the street is for $ 150,000, should you choose? The other house, of course. This means that your house is not worth it for sale must be the same for less, to entice a buyer.

U.S. dollar Rehab differ from restorer restorer according to whether they work themselves or use subtitles cheap, or try to make a general contractor expensive. The scope of work must be the same as what you need, look at comparable houses as investment (unless the plan is to sell well below market value to do). We do not try all the different contractors to get bids if we are bidding. All offers, the real would be sold before Wed bid always together! Instead, we have developed enough dollars on the general condition of the home rehabilitation is based. E 'an exact science? No, but neither offers are always missing something. So why not with a leader who probably 90% accurate and can work fast offerings?

Buy / Sell / Hold costs include expenses such as appraisals, legal fees, title search and title insurance, taxes, loan debt service, utilities, insurance, taxes, real estate commissions, fees and closing, on behalf of the end of buyer. Again, costs vary for each investor depending on the situation. In the Atlanta area, 15% of ARV seems a good average budget of B / S / H costs. You restorer, calculate your specific B / S / H cost, then use that percentage for future offers.

Profit margins are the fun part of the equation. How do you want? If youre wholesale property, is to consider how much business should be left to the buyer, the investor for the deal interesting.

There. Thats how we calculate the most you pay for a property. But it is this, what you should pay. It 's the maximum you pay. And 'the deal breaker. You do not pay a penny over the MAO. Your negotiations should lead to below the MAO possible. The difference in the amount of additional profit in your pocket. What you should pay is the minimum price below the MAO that the seller accepts.

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