In the recent days, housing market is slowly
shifting towards the buyer and as a result of which, many of the realtors are
making good revenue by flipping real estate. The term "flipping" is
very new for buying homes, which stands for renovating them, fixer-uppers, and
then selling them at a profit margin. Flipping real estate system is fetching
good revenues but not as huge as they once were. Regardless of knowing all the
facts beginners are still entering this flipping arena to get success out of it.
Now a question will arise concerning such property is, "How much I need
to pay for it?" The answer is diverse for all homes for sale and is not an
The most common method of calculating MAO [Maximum Allowable
Offer] that gives you an idea of the cost of homes for sale after renovation are
MAO = ARV - Renovation Costs - BSH - profit margin
After Value [ARV]
ARV is the possible price you may get on the sale of
the possessions. The ARV [After Repair Value] is the cost of the homes for sale
Points to remember
- To determine
this cost, your realtor may be able to help you to compare the prices for homes
sold during the period of last 6-10 months.
- The comparable homes should
be located within 1 mile of the preferred property.
- The comparable homes
must be similar in characteristics to the home you desire to purchase.
total area (square footage), features, age of the buildings, architecture and
types of rooms presented must be similar.
- Ignore the difference in the
homes for sale conditions.
is the cost of renovating the property in order to turn a profit.
- Examine the property with your realtor
and take remarks.
- What are changes required in order to compare the property
with the other homes for sale?
- Calculate the expected and unexpected renovation
cost and discuss with your professional realtor.
- Calculate each renovation
requirements; add them and you will probably get the renovation cost.
(Buy, sell and hold)
After flipping few homes for sale, you will able to
calculate the percentage of ARV to compute these expenses. Buying and selling
of home will incur fees like debt collection, appraisers, title search and insurance,
attorneys, loan origination fees and many more. Whereas, the holding cost will
incorporate insurance, lawn care, utilities and others that you will incur during
the purchase of properties and closing of properties.
MAO or Maximum Allowable Offer is the maximum amount that you will offer on
homes for sale. To ensure higher profit margin, you need to offer the lowest amount
to the seller to accept on our venture. It is the deal breaker.
If you need
more information on Homes For Sale Kefalonia,
please feel free to get in touch with AEC-Group.