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chatterweb

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Reply with quote  #1 
https://www.redfin.com/CA/San-Diego/880-Orchid-Way-92154/home/6159720?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&riftinfo=ZXY9ZW1haWwmbD0yODg0Njc3NSZwPWxpc3RpbmdfdXBkYXRlc19pbnN0YW50XzE1JmE9Y2xpY2smcz1zYXZlZF9zZWFyY2gmdD1pbWFnZSZlbWFpbF9pZD0yODg0Njc3NV8xNTY2MTgxNzg4XzImdXBkYXRlX3R5cGU9MyZzYXZlZF9zZWFyY2hfaWQ9MzEzNDczODQmbGlzdGluZ19pZD0xMTA5NjM2MDYmcHJvcGVydHlfaWQ9NjE1OTcyMCZwb3NpdGlvbl9udW1iZXI9MA==
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rickencin

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Reply with quote  #2 
$415,000, 1,258 sq. ft built in 1972. (Oooh, lead paint potential) $330/sf  Not the cheapest house per sf in the area.  "Sellers will not make any repairs, nor supply pest clearance. Pest report available. Needs work/sold AS-IS as part of a trust sale." I'd say they are asking for all the money. Not a  flip at first glance. Insert your own "borderline" joke here.
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javipa

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Reply with quote  #3 
At face value, this seems like something that is meant to attract a sweat-equity buyer.  It's gonna cost $40K in overhead just to flip it, without doing a thing to it.  Add $40K to $415, and you're at $455.

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My thought would be to contact the listing agent and ask if he's got anything that's not on the MLS yet.

Frankly, it's rare to uncover a wholesale quality deals from the MLS.  Not impossible, but I'm betting that you're finding the bargains are already sold, by the time they show up on the MLS. 

That's why I suggest getting on the agent's pocket listing list, so you can get a crack at the real bargains, before everyone finds out about them, and the agent doesn't have to share his commission.
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That doesn't mean you can't throw out a low-ball offer with a strong financial statement.

I remember back when the banks were fielding offers, like frogs in a hailstorm, on foreclosures in 2008, and one of the members here said the only way he could get to the front of the line, was to make his earnest deposits equal to his offering price with no contingencies.

If you can do 'that,' it would separate you from all the goats out there ...and get the attention of everyone involved in the deal ...and perhaps put you at the head of the line on the next deal that needs to be sold quick ...and sure (without the risk of all sorts of equivocations, and weasel-clause non-sense that the amateurs and weak buyers tend to include in their offers).

*** You can't steal in slow motion.

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chatterweb

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Reply with quote  #4 
I am not interested in buying this property, just want to learn. It is located in my zip code.
The SFR I live in was just physically appraised at 460 K. And it is circa 1969, older than the FOR SALE property.

It also has 1090 sq ft making it smaller than this property. My house does have a swimming pool and spa. I am closing soon on a cash out refinance to make some upgrades to my circa 1969 house, which is the reason for the appraisal.

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rickencin

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Reply with quote  #5 
In general there are two ways to make money in real estate.
Buy and Hold (renting) is recurring income with some one time income possible when you sell. Calculating CAP and ROI are the most common metrics.  How do you compare a 2/1 SFR with a 5/3 McMansion and a fourplex with a 10 unit apartment building? CAP and ROI will do it.  The point is to earn money, right?  Of course there are differences between these investments.  You aren't going to sell a fourplex as a pride-of-ownership single family home to a retail buyer. Apartment buyers are going to insist on highest CAP rate evaluation (lowest price).
Flipping is one time income.  You need to calculate all the expenses and the income and determine a profit.  There is nothing sillier than to have everything go to plan and you lose money.  There is only loss in buying and selling at the same price.  Hence the emphasis on motivated sellers and motivated buyers.  Sure, you can flip to wholesalers, but they are probably very experienced and will drive a very hard bargain, leaving you with a small profit. I would start out with a cosmetic fixer, paint and carpets, and then move on to something more difficult.  Notice in those flipping shows how the demo always goes really well, but the re-build, not so well.  Having 20 years construction experience is a good idea.  Knowing sub-contractors who will work for 1/3 of retail is important.  Like a little birdie it's all about cheap, cheap, cheap.  Money is a number.  Math is the study of numbers.  Accounting, primarily is the study of filling out tax forms and regulatory compliance forms. Most businesses won’t know whether or not they make a profit without accounting.  They just know what is left in the checking account after all their personal spending.
Most people bluff their way through financial decisions. Which is the best car deal?
A $40,000 Mercedes with $5,000 down and $6,000 for your trade in and 36 monthly payments of $829 a month. 
A $30,000 Toyota with $4,000 down and $5,000 for your trade in with 60 monthly payments of $425 a month. 
A $20,000 Honda with $3,000 down and $5,000 for your trade in and 72 monthly payments of $273 a month. 
99% percent of payment buyers are just bluffing and think they can figure out the deal based on past experience and sheer intuitive brilliance.  The Mercedes has an interest rate of 1.9% and you pay $857 in interest.  The Toyota has an interest rate of 7.9% and you pay $4,488 in interest.  The Honda has an interest rate of 17.9% and you pay $7,657 in interest.
Sure everyone will scream, but I can only afford $273 a month!  Which would have been $176 a month at the same interest rate as the Mercedes.
You will be comparing properties in the hundreds of thousands of dollars that vary in value by much more than the cars I have presented.  Don’t bluff, do the math.

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javipa

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Reply with quote  #6 
rickencin, that was an insightful post.

I would say that most people rarely drill that far down into logic to make a decision.  They rely on their feelings.  Frankly, I think that logic undermines their dreams, so they avoid logic, other than which decision results in the most gratification.

Frankly, my best customers make emotionally-gratifying decisions, not logical ones.  And those are the ones to which I market.

For example, I am selling a newer house that's worth $570,000, all wet, that I will retail for $640,000.  Of course, that's no bargain.  However, the buyers I appeal to are looking at the financing, not the price.  In fact, I don't market the price, because I don't want to attract bargain hunters.  I want to find buyers who want to own a house they can't own, without my help, regardless of the price. 

It's very similar to Rent-A-Center's model.  The terms trump the price.  Essentially, I'm selling the shiny new Mercedes Benz car for over-retail, but with the Toyota financing terms.

It's the same with my renters.  I charge over-retail rents, and get giant deposits (deposits in some cases that are more than FHA requires to get a loan on a house....), because I market to those who can't get other landlords to rent to them ...for a variety of reasons.  

Of course, there's a downside to doing business with people who operate to gratify their emotions, and not on logic.  And that's why requiring something to lose, goes a long way to ironing out the crazies that I also seem to attract with my approach.

Good post.


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"Obstacles are those frightful things you see when you take your eyes off your goals." --- Henry Ford "

"149 Ways (Plus One) To Find Motivated Sellers and Get Them To Find You" >>>Click Here To Download 

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