I made an offer on a property today that is listed on the MLS.
Details: Asking: $87,ooo
After Repair Value (ARV): $95k
Repairs: $7.5 k
Listed w/ realtor: Yes
The seller inherited the property and currently lives there. They want to upgrade. I don't blame them because its not in a great neighborhood, and needs quite a bit of work.
Strategy: Use private money to purchase and fix up. Afterwards, re-fi and have a long term rental w/ 20% equity and postive cash flow. Now, the cash flow is not impressive, but the rental market here is real soft so I need to be a little flexible (see below). Basically, I'm offering a MLS property at 70 cents on the dollar.... I'm surprised that the realtor didn't flinch when I told her ;-) I couldn't belief that it took 1.25 hours to sign the paperwork for the offer! I've attached the spreadsheet to show the break down..
The cash flow was calculated from another spreadsheet that estimated the Net Operating Income (NOI). If your monthly payment is below the NOI, you have positive cash flow.