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Initial calculations to decide my offer.


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Hi all,

My wife an I are new to the property investment game. I am just reaching out to see if anyone could share a basic calculation that they use to formulate an offer on a property that we would like to buy, refurb, refinance and then rent out. 

I am using figures that involve me buying in cash initially, then hopefully pulling my money out after the refurb, but the offers required seem too low and we haven't had much luck with our offers so far. I'm not sure if I should be focusing on buying with a mortgage so only putting 25% down then refinancing after 6 months??

 

Any help/advice would be much appreciated, Thank you in advance.

Steve.

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Hi Steve,

  We put offers based on the ROI or yield we can achieve. The offers are also based on the market value and last sold price of the property. There is no scientific formula which says this should be your offer price which can be applied across the board, based on my experience. If our strategy is to achieve cashflow and the property achieves it, we put an offer close to the asking price.If it is for a refurb and based on the condition of the house you would use the refurb costs to negotiate. You could also invest along with the owner to share profits and costs.

As a general rule you can put offers 5-10% below asking price based on your DD. This varies from individual to individual and is based on the circumstances and the property/strategy .

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