Today, I want to make another plug for how profitable investing in foreclosures can be. Think Realty recently posted a blog that really jumped out to me called, “Foreclosed Property is a Slam-Dunk Great Deal for a Smart Investor.” It is a great example of how to recognize a smart deal, from a savvy investor. This particular post caught my interest because of its author, Abhi Golhar, speaks to the same great deals that we at the PIP Group pursue.
So here are the numbers for deal he heard about, the acquisition price is $125,000 with an ARV of about $235,000 to $250,000. Abhi plans out bidding for this property at $135,000 along with dropping another $15,000 to $20,000 to reach a total of $155,000 and with a contingency at $160,000. So now, if he gets this deal, and sells it at $250,000 he will be able to fetch between 58-60% fair market value. If you check out some of the webinars from our site you will see me run through a number of similar deals, too.
Now for a little more detail into what makes this great deal. The place he is speaking of is nearly done and looks great, at least on the outside. Which leads into Abhi’s estimation for the ARV cost on the property. A quick note for newer real estate investors , if you aren’t familiar with the acronym ARV, refer to our latest webinar on Bank Foreclosures in GA, SC and NC here, but in short ARV stands for ‘after repair value’.
So let me sum up what makes this deal great. This isn’t a high cost investment but it has great potential and won’t require dumping all of your money into it, because of the condition and the estimated ARV amount aren’t too high. The deal is great, the numbers are easy, not too high and the property is in great condition which makes it a safer investment in the long run. Abhi himself believes that a 60- 65 percent of the fair market value minus repair cost is a super deal that can be easily fixed up and flipped. Its smart move to be willing to pay a little more for a smarter investment. This deal is an ideal example of a starting point for new investors and a great deal for smart investors already involved.