i run a real estate investment company in Philadelphia. we target about 100 deals a year and i can tell you that if you end up into a property at 80% repaired value, you are not buying right. i agree with the guy before that said he picks stuff up around 30-40%. We tend to be even lower around 20-30% of the fixed value. each market is a bit different, but look at the cashflow for rental areas and the DOM for flip areas. those are good starting points. at the end of the day, we wont touch a property if we are fully into it for more than 65% ARV. also, DO NOT USE ZILLOW and garbage sites like that for comps. get access to your local mls. all of this is just my experience and opinion
Well I am glad somebody agrees! I used to live up in the Boston area. It is a total ripoff compared to many other parts of the country. Small home on a small lot and still a high price tag - makes no sense. It is not like manufacturing/R&D/etc is flocking to the northeast! Is there new mining or agriculture going on in the northeast - nope! What gives - why don't prices drop? They don't drop, because banks aren't smacking down on foreclosures or forced to sell REO. -gastropod
You can thank BU, NEU, Harvard, MIT, Wentworth, etc. for high prices. I always thought they were in the education business also, but after seeing them devouring Allston, Cambridge, Somerville areas I finally realized they are actually in the Real Estate business. Education is really like side money to them.
Buy a small working farm far from the city with a well stocked pond. And get a gun too... maybe several. That's the best real estate investment, IMHO.
low balls (like ridiculously low), junk proof of funds letters (if any), incomplete submissions, etc...just for basics.
1) Some people who buy a house, and then put a huge amount of additions and modifications into the house, can wind up effectively at zero after a market craters. 2) Also, Detroit may challenge that concept, from a reality point of view. There have been houses so ripped up, they were worth almost scrap value to get rid of them. 3) If a house needs more repair than its worth to fix it up, than it is also effectively zero to negative.
"What constitutes a jackass offer?" It's amazing sometimes. Some people think that they are smarter than everyone else and that only they can see value. So calls and offers come in at half of list on a property already off dramatically from the peak. Don't waste your time, the banks are past the point of giving a sh*t. As for the "cents on the dollar" conversation, it's really irrelevant. If you want to buy the best property in the worst neighborhood, then sure you'll get a great discount. If you want a good property in a good neighborhood, then your not going to get 20 cents on the dollar. Forget it! IMHO, now is a good time to invest in solid properties, not low priced gang invested slum property, but that's what makes a market.
The Orlando area has some good deals right now with condos in good areas going for as low as $30k that once sold for $200k+. Last week, an REO 1/1 condo listed for $26k and i put in an offer for $35,600 and got outbid as the second best. There are also some nice ones in downtown Orlando that were $500k and are now $125k. The would be $40k condos rent for about $650 and the $125k for about $1300 so as you most likely have to pay cash for both as banks here are not lending for the cheap condos or those within buildings more than 40% investor owned (or some such number), i am sticking with the cheaper ones. Houses are not down as much as condos but you can get into them for about 2001 prices in good condition or wrecks for much cheaper per square foot (but i am not brave enough to venture into those as i have no clue about repair costs). You also might check condos in Aventura or Sunny Isles, down close to Miami. I had gone out to Vegas for a look and found some of the killer deals on realtor.com, like the nice, new ones that were $200k that had dropped to $40k had actually transformed into section 8 housing, which i guess you are at least guaranteed a govt. check, no? Anyway, strange days have found us and opportunity does some high energy thumping rhythms upon my noggin, or so i imagine