Maximum Offer Worksheet

worksheet...enjoy

Thanks Mike, it's just what I needed.

Hi Mike,

But I am not sure that I understand the meanings of a couple of things. Perhaps you can explain them to me?

What are the...

Carrying Costs (And)
Maintenance Costs

When it comes to finding and buying a house?

Thanks,
Theo T.
CogniWorld-LV

Can you fill in numbers please for some of the newbies. I've had this drilled into my head by Mike but, it took a while. I actually had to make an Excel spreadsheet to figure it all out for me. For instance, the percentage you use for holding cost, commission, closing, etc.

Theo,
Carrying cost can be: electric,heat, insurance, mortgage payments,advertising,etc

Maintenance cost can be: mowing,snow removal,locks changed,etc

Quote:
Would you be able to show a real life situation with dollars and sence? Thanks
Jbird61

From nstreet:
A short sale I worked on:

$115,000 - value of the property
- $17,000 - profit (I wanted a little more than 10% for my time)
- $28,000 - Fix up costs (this included lifting the corner of the foundation)
- $6,900 - Holding costs (115,000 x .012(1.2%) x 5 months - this included time to fix the property)
- $3,450 - Closing costs ($115,000 x .03(3%))
- $6,900 - Realtor fee ($115,000 x .06(6%))
---------------------------------------
= $52,750 - The most I would offer (actually, I offered about $50,000 because I wanted room to negotiate if I needed.)

Thanks, Mike, for sharing your worksheet -- very helpful.

Appreciate you sharing something all of us could(should) be using.

Thank you very much for the excellent worksheet and most of all the explanation and example for those of us just starting out!! Very impressive.

Jeannie

You can also go by factor. You just need to know what percent buyers are paying in your area.
For Mike's area, it's looking like he used a 70% factor minus repairs.
ARV 115k x.70%= 80,500 minus 28k repairs = MAO of 52,500.

This is A simple way to factor in all your costs but you need to know what your markets factor is.
70% in San Diego is a home run. Most investors here, are paying 75%...

Thank for this example, Mike. I like this formula, but if you use the 70% of ARV, minus repairs & your profit, the numbers don't come out the same. Would these numbers be enough to present to the potential buyer, or, we need better numbers? What if it's a rental property?

I think that the difference is that Mike's formula above is for if you intend on flipping properties yourself with cash. Compared to the below formula for wholesaling:

115,000 * 0.7 = 81,900
81,900 - 17,000 - 28,000 = 36,900 MAX WHOLESALE OFFER (with Mikes numbers)

Now note that 17,000 is somewhat greedy for wholesaling a deal like this but perfectly reasonable if you have the cash to buy and flip (not wholesale), a more realistic wholesale fee would be 5,000 for this property. So that would change the maximum wholesaling offer to 48,900 if my math is correct. But if you can make 17,000 GO FOR IT! Unless you are more interested in building a good reputation by handing off killer deals instead of getting greedy, it's really up to you.

When you wholesale you don't pay holding costs, closing costs, or Realtor fees. The buyer pays holding and closing costs, and the seller pays Realtor fees and closing costs, you are the middle man in wholesaling. Correct me if I'm wrong Mike, that was just my understanding of it all.

Writing this actually brought up a question I have for anyone that knows, when you do double closing, do you pay twice as many closing fees as a buyer/seller and should that be considered when making your max offer?

Thanks

wrote 'how do I present this to my buyer?'
refer to my post
http://www.deangraziosi.com/real-estate-forums/my-deals/81893/deal-you

this presentation lacks the ROI which you can figure in if needed.

As dominic mentioned, this is a flip deal, if you wanted to wholesale or sell to a buy/hold buyer you would have to change the numbers. Refer to the post "offer formula" you can find in search box.

This was nstreet(official coach)reply to offer formula that I used here as an example

Thank you, Mike!

hi everybody
Here is a copy of the spreadsheet that I use for my rehabs with some real numbers of rehab that I am purchasing right. As you can see you just input three. Important numbers purchase price, sell price and fix a price, you get a pretty good idea if there's a profit or not (green equals profit, yellow equals caution and red equals losing money) and below gives you a breakdown what the holding costs will be per month based on the number of months you will hold onto it for.if anybody has any questions or any way of improving this spreadsheet. Please p.m. me
thanks, Reuben

sorry everybody. How do you in an attachment to the post. I'm trying to share my Excel spreadsheet with everybody?

Thanks, Reuben

I think you can only attach files when you start a new thread. I don't see a way to attach one in a reply

Just found this after looking at the seller info form, thanks!
I got to keep organized with stuff like this or I'll go crazy .
Thanks for helping the rest of us!

RENinja

What are your buyers wants?

Do they want 30% ROI?

Find deals to fit your buyers wants.

Use the tool below to run the numbers for max offers and ROI's for your buyers. It calculates the expenses, repairs and more.

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