OfflineCalculating Offer Price
Based on property with: ARV = $200,000, Repairs = $10,000, Listed Price = $190,000
Scenario#1 - Buyer says they want 30% equity after Rehab expenses
After Repair Value $200,000
Required Investor Profit = -(30% ARV) -($60,000)
Rehab -($10,000)
Your Profits -($10,000)
Max offer price if not REO or Short Sale $120,000
If REO or Short sale = -(.03 *120,000) for transactional funding and AB closing costs -($3,600)
Wiggle Room -($1,400)
Max offer price if REO of Short Sale $115,000
Scenario#2 - Buyer says they want to make $25,000
After Repair Value $200,000
Required Investor Profit = $25,000 -($25,000)
6% of ARV for Listing commissions -($12,000)
3% of ARV for Closing Costs -($6,000)
Rehab -($10,000)
Your Profits -($10,000)
Investor balance before holding costs $137,000
HM expense = .06*$137,000 = -($8,220)
Max offer price if not REO or Short Sale $128,780
If REO or Short sale = -(.03 *128,780) for transactional funding and AB closing costs -($3,863)
Wiggle Room -($1,917)
Max offer price if REO of Short Sale $123,000
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What is the difference of max offer if not REO or shart sale, what do you mean by this. Little confused about the difference between the two offers?
And what is "HM expense"?
for breaking it down for us! this is pretty awesome!
Anthony: two prices to offer are 1) if you're buying a REO or Short Sale from a bank, and 2) if you're buying from a private homeowner
according to the breakdown, your costs are a bit higher (hence (-)wiggle room) for a bank owned property than your costs for a property from a homeowner.
HM="Hard Money" loan
Learning and progressing every day,
Valerie
Valerie
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My journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/59110/...
In your scenario #2 I got roughly the same MAO in my first example in this thread: http://www.deangraziosi.com/real-estate-forums/contracts-and-offers/1130... keeping the profit at 12.5% and with my fee at $2,500. Following your formula it was only $122 higher. But then again it is a REO, and I took most of the reductions off the top, instead of HM expense, transactional funding/ab closing costs, and wiggle room. I'll also try it using equity formula and compare.
New REI in SWFL!
great info
great info