Q. Can you explain exactly how we can model your approach to a realtor to be looking for rehabs, the percentages you use, and how we are to evaluate them? Please be as specific and systematic as possible for those of us who are very new to this particular way of finding properties to find, rehab, and keep for cashflow.
A. It is very simple. Our realtor we work with knows that we do not even want to look at a property unless we can get it for 76% of the CURRENT appraised value or less.
Example: Current appraisal $100,000. We purchase for $76,000 short term money. $5000 for carpet, paint, appliances and fixtures. We then do a quick refinance for 80% of the appraised value. The property will usually appraise for $115,000 plus after we have done our work. 80% of $115,000 is $92,000 which allows us to pay our short term money back, cover repair costs, cover closing costs and put a few dollars in our pockets. We then market the property as a lease option for $119,000 or maybe even $124,700.