OfflineWhen doing the 25:1 strategy, and making offers at 70 to 50 percent off the ARV, where do you figure in rehab costs? Does anyone that is closing deals now have a practical system on including rehab costs when submitting a multitude of offers and still leave enough equity in the deal for the end buyer? Especially properties that appear to need a major renovations. Any input will be greatly appreciated.
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Pat Rivers
One thing that we all have to remember is that we cannot offer more that we have figured that we can. When you start making several offers, you will find out what your percentage works out to be. A good formula to go by is the one that I use a lot, but remember that your fees will be different wherever you may live in the country.
ARV______
- 15% (closing costs, realtor fees, utilities, holding costs)
- Rehab Cost
- Your Profits
- Your Buyers Profits
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Max Offer
Try this formula and make changes to your formula, according to your area. If your buyer is going to buy and hold property and be a landlord, you would only need to take 9% off the ARV, because they will not need to use the realtor fees at this point.
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Thanks for formula! Not quite ready for the Academy but looking for the future. It's a goal to work towards!
Thanks for taking the time to comment.
Be the champion GOD created you to be.
My Blog: http://www.deangraziosi.com/blog/13389
Pat Rivers
How do you estimate the cost of rehabbing if you dont have possession or have it locked up on contract, when it looks like it needs everything rehabbed?
This is not dead on but with that said:
low 8-10 per sq ft
mid 11-12
High 13-16
I use this as a quick ref when walking property.
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Hi Coach thanks for sharing and keb64 your cost is that in dollars or %, many thanks to all, Jim
jbischoff