How to determine what you’re going to offer on a deal in 30 seconds? Imran Clark and Darrell Kucan share a quick tip on how to make quick offers. Check it out!
Mike Hambright: Hey, it’s Mike Hambright of Flipnerd.com. And we have a quick VIP tip to share with you Imran Clark and Darrell Kucan, whose going to tell us how to determine whether a deal is a deal or not within 30 seconds.
Man 1: So easy way to do this is you got to find your ARV and once you find your [CUTOFF] got 10% off your ARV. That 10% is going to include your holding cost, carrying cost, By SOB’s…
Man 2: Buy and sell.
Man 1: … buy and sell those kinds of things. So ARV.
Man 2: If you sell it yourself. If you hire an agent add another 3%.
Man 1: Add another 3%. So 13%. So take 10% off your ARV, then subtract your rehab costs, and in our situation we like to make profit of what we put into the rehab. So if it’s a $50,000 rehab we, love, like to see a $50,000 profit.
Man 2: Net, Net, Net.
Man 1: So ARV, minus 10%, minus rehab costs, minus profit, should equal your purchase price.
Man 2: Right. RIght.
Mike Hambright: Awesome.
Man 2: Unless it’s a really, really, really, easy rehab add more profit. Because you don’t want to buy a $500,000 house that you’re only going to make 10 grand on. So as a rule of thumb, kind of thing, and then re-slide it; like if you’re going into a higher end property, give yourself some more room. And you can work it backwards too; go 15% of your purchase price instead of 10% of your ARV. So what are you using about 15% of your purchase price, 10% of your ARV?
Man 3: Probably.
Man 2: It’s so close to what you end up really spending on purchase, carry, and resale costs, it’s, it’s right there every time.
Mike Hambright: Well that’s it. Thank you for joining us for another Flipnerd Flip Tip.
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Mike: Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.