Finally! A Rehab Purchase Formula that Makes Sense-

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Finally! A Rehab Purchase Formula that Makes Sense-

Posted On : Nov-05-2011 | seen (629) times | Article Word Count : 635 |

When you get started in flipping homes or making rehab purchases, you will find that one roadblock will be determining how much to offer for the home. You will have to determine how much you can offer at a maximum while still having the potential for a profit once you rehabilitate the home. You will also have to determine how much you can afford for the offer. All of this together can make things quite difficult, especially if you are new to the game. If you are not careful, you could over extend yourself and you will not be able to make a profit. Alternatively, if you come in with too high of an offer, you could get shut out and you may lose the property to someone else.
It would be nice if you had some way of determining how to make that offer. A formula would be great, wouldn’t it? The good news is that there is one! Right here, you will find everything you need to always make the best offer on the property you would like to flip.
When Do You Make Your Profit?
The first thing to remember is when you actually make the profit on a property. Many first time investors mistakenly assume that the profit comes in when they actually sell the property. While that may be when you actually get the cash, this is not when you make your profit. You do not make the profit during the house flip either. Instead, the profit comes in when you first make that offer on the home. If you do not make the right offer, you will lose that profit from the very beginning.
Understanding Maximum Allowable Offer
The formula that you will need to use every time you purchase rehab property will be to understand maximum allowable offer. Often referred to as MAO, this offer should be the most you will be willing to pay for a property. If the sellers will not accept this, then you will know that your potential for profit is just not there. If you calculate the maximum allowable offer and then stay with it, you can make the best profit on your rehab properties.
Three Steps to Calculating Your Maximum Allowable Offer
In order to determine what the MAO is on the property you are considering, all you need to do is follow a simple three-step formula. If you do this every time you make a purchase, you will have a much better chance at succeeding with your flips.
Step One: Determine the value of the property after it is repaired. Hopefully, the home will be worth a great deal of money more once all the repairs are made. You can get a good idea of how much you will be able to sell the home for based on what other homes in the neighborhood are selling. Often referred to as “after repaired value,” this number will be important to the formula.
Step Two: Determine your repair budget. This estimation can be a bit confusing if you are new to flipping homes. Do not be afraid to get advice, but you will need a good estimate of how much you will spend on your repairs to the home.
Step Three: Use the formula. Once you have the two numbers above, you will just need to use this formula. The ARV (after repair value) – cost of repairs x .70 = MAO.
If you use this three-step process, you will have an easy way to determine the most you are willing to offer on a house flip and still make a profit. This is especially useful for beginning investors, but it can be a formula you will find yourself using again and again.

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<h1>Finally! A Rehab Purchase Formula that Makes Sense-</h1> Author: <a href='http://www.articleseen.com/profile_Joe Abbascia.aspx'>Joe Abbascia</a> When you get started in flipping homes or making rehab purchases, you will find that one roadblock will be determining how much to offer for the home. You will have to determine how much you can offer at a maximum while still having the potential for a profit once you rehabilitate the home. You will also have to determine how much you can afford for the offer. All of this together can make things quite difficult, especially if you are new to the game. If you are not careful, you could over extend yourself and you will not be able to make a profit. Alternatively, if you come in with too high of an offer, you could get shut out and you may lose the property to someone else. 
It would be nice if you had some way of determining how to make that offer. A formula would be great, wouldn’t it? The good news is that there is one! Right here, you will find everything you need to always make the best offer on the property you would like to flip. 
When Do You Make Your Profit?
The first thing to remember is when you actually make the profit on a property. Many first time investors mistakenly assume that the profit comes in when they actually sell the property. While that may be when you actually get the cash, this is not when you make your profit. You do not make the profit during the house flip either. Instead, the profit comes in when you first make that offer on the home. If you do not make the right offer, you will lose that profit from the very beginning. 
Understanding Maximum Allowable Offer
The formula that you will need to use every time you purchase rehab property will be to understand maximum allowable offer. Often referred to as MAO, this offer should be the most you will be willing to pay for a property. If the sellers will not accept this, then you will know that your potential for profit is just not there. If you calculate the maximum allowable offer and then stay with it, you can make the best profit on your rehab properties. 
Three Steps to Calculating Your Maximum Allowable Offer
In order to determine what the MAO is on the property you are considering, all you need to do is follow a simple three-step formula. If you do this every time you make a purchase, you will have a much better chance at succeeding with your flips. 
Step One: Determine the value of the property after it is repaired. Hopefully, the home will be worth a great deal of money more once all the repairs are made. You can get a good idea of how much you will be able to sell the home for based on what other homes in the neighborhood are selling. Often referred to as “after repaired value,” this number will be important to the formula. 
Step Two: Determine your repair budget. This estimation can be a bit confusing if you are new to flipping homes. Do not be afraid to get advice, but you will need a good estimate of how much you will spend on your repairs to the home. 
Step Three: Use the formula. Once you have the two numbers above, you will just need to use this formula. The ARV (after repair value) – cost of repairs x .70 = MAO. 
If you use this three-step process, you will have an easy way to determine the most you are willing to offer on a house flip and still make a profit. This is especially useful for beginning investors, but it can be a formula you will find yourself using again and again. 
About the Author: Joe Abbascia is an expert property investor providing vital knowledge on how to buy properties wholesale, about flipping homes successfully and more. You can learn more by visiting PropertiesCentralWholesaleDeals.com. Article Source: <a href='http://www.articleseen.com/Article_Finally!-A-Rehab-Purchase-Formula-that-Makes-Sense-_100618.aspx'> http://www.articleseen.com/Article_Finally! A Rehab Purchase Formula that Makes Sense-_100618.aspx</a>

Article Source : http://www.articleseen.com/Article_Finally! A Rehab Purchase Formula that Makes Sense-_100618.aspx

Author Resource :
Joe Abbascia is an expert property investor providing vital knowledge on how to buy properties wholesale, about flipping homes successfully and more. You can learn more by visiting PropertiesCentralWholesaleDeals.com.

Keywords : home flipper, house flipper, flipping homes, foreclosure, finance, financing, Worcester, Massachusetts, Mass, loans, hard mon,

Category : Finance : Real Estate

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