Lens Repair
After repair value, or ARV, is one of the most important figures for an investor to know. Without calculating ARV, you will not know if you have a good agreement or just another money pit.
Determining the ARV is important for several reasons. Number one is the purchase price. Number two is the value of resale. Let's talk first purchase price. you hit a large piece of property for sale. It is in the best shape and you realize you need some repairs before selling again. How to know if the price is too much?
I begin by looking at comparable sales, also known as comps. If you happen to be in an area that is with the technological times, then you can go to the city or county website and search the records of real estate valuation. Thereafter, find the property you are looking to buy. Once you find the property records, there should be a tab or area that references recent neighborhood sales. Compare the property you want to buy with these recently sold neighborhood properties to determine the ARV. Each recent neighborhood sales display usually shows the date the property sold and at what price. Simply compare the bedroom and bathroom configuration, as well as square footage, to find the recent sales price similar properties.
Now you recent sales prices of properties that are similar in size and configuration you want to buy. But you have two pieces more to look first. Always make sure to find similar properties have sold in the last six months to be sure. As you know, the market may change in such a way that housing prices fluctuate too much too soon. You also want to ensure that the compositions are nothing more than a mile to a mile away, preferably in the same neighborhood, if possible. Again, I like to be conservative for safety reasons. Now that has reduced its size similar compositions and configuration, which was sold in the last six months and are half a mile to a mile, take over the recent sale price of the group and use that as your ARV.
Now that you have determined the ARV, you can reverse engineer the maximum allowable offer. Multiply your ARV by 0.65, or 65%. From there, subtract the repair costs, the purchase / sale or exploitation, and their desired profit, to reach the maximum allowable offer. Examples of purchase, sale, and investment costs would things like title work, legal fees, closing costs, fees of the realtor, title insurance, mortgage payments, taxes, and utilities from the time the property owner to begin repairs until you sell it again.
For example, their compositions offer a reasonable ARV of $ 150,000. Multiply $ 150,000 by 0.65 and have $ 97,500. Estimated repairs are $ 15,000, purchase / sale or operation of a cost of $ 5,000, and would like to make a profit of $ 25,000. Subtract the repair cost of $ 15,000, buy $ 5000 / sell / hold and utility costs of $ 25,000 of $ 97,500 and reached $ 52,500. $ 52,500 is the maximum allowable offer that should not go higher. pay more than that, and you may find yourself in trouble financial compensation if you go over budget or the house is sold for less than its estimated ARV.
About the Author:
Len Costa is a real estate entrepreneur specializing in Wholesaling discount properties. He frequently hosts free training teleseminars and offers a variety of valuable real estate products, services and information. For High Profit Properties Well Below Market Value, visit www.MaverickWholesaleDeals.com to sign up. © 2008 – All rights reserved.
Article Source: ArticlesBase.com – How to Determine After Repair Value
Lens Repair
Lens Repair
