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EricJ Category: Need Advice
Current Grade: B
Total Views: 430
Member Comments: 2
 Posted on: 08/03/2008
Posted by: EricJ
Blog Points: 14
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I wanted to get an idea of what landlords will pay for a property in a high rental area that has already been completely rehabbed, a turnkey if you will. What percentage of ARV are people willing to pay in this market? I would assume 80% would be ok? I usually see properties that need work .. not sure on the ones that already have had the work done. Any insight would be greatly appreciated. Thanks.
Current Grade: B
Category: Need Advice
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JohnCorey
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Posted By: JohnCorey on 08/05/2008
It is a good question. Frankly the number is what the investor will pay. If you do a number of deals then you will see an average. When investors do not know you they will not believe anything you say about the potential value and future income. Once they have done deals with you and seen the results first hand they will come to understand how you present the deals. Some will then take you at face value, some will apply a specific discount to your numbers, etc.

While trying to find buyers for the deals that are rent ready or have already been rented I suggest you also look for ways to hold onto deals. You know the numbers. You know the details. You do not have to convince yourself that the deal is a good one. Over time building a passive income goes a long way towards buying your time back compared to a business model where you have to keep finding new deals and new investors to take down the deals. If you hold some rentals then you can speak with more authority to other investors as to why the numbers work and how they can follow what you do.

[strong]John Corey [/strong]

Real Estate Investor (REI) with over 20 years of experience. Multiple states and countries; present portfolio spans 11 time zones.

[Color="blue"]Always open to answering questions. See the[/color][color="red"][em]contact page[/em][/color] [color="blue"]on my blog; link below.

[strong]Pay it forward[/strong].[/color] [link="http://www.ChelseaPrivateEquity.com/blog/"] www.ChelseaPrivateEquity.com/blog[/link]
 
Brian Lucier
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Posted By: Brian Lucier on 08/03/2008
I do not place an offer based upon what some thinks the ARV should be. I base any and ALL offers on the operations of the building as it currently stands. I want to see and verify ALL numbers then I base my offer on that.

You said no rehabs, that's great. But in a real deal, after walking the property, I would come up with a number that I want to receive at the closing table for repairs. Not cash credits, but actual cash. Why? Because if I get that figure deducted from the sales price, the repairs still need to be made using my cash. Not good. I want the bank, or seller to pay for the repairs, or fix it before I buy it.

So the answer is - I base the offer off of the operations. Not projected rents either. If they want to sell off of the projected rents, then raise the rents to that number before I buy it.
I would be very interested to see how other think about this and what their answers are.

Brian Lucier