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3. Now subtract a profit that makes it all worth
effort. This gives you highest price you can pay for house. Walk away if you can't get it for this price or less. Offer several thousand less, of course, to give yourself negotiating room.
An Example:
You find a fixer-upper, and determine you can get $98,000 for it when it's done. The expenses of buying will be $2,000. You get repair estimates of $8,000. Carrying costs will be $2,500. The sales commission will be $6,500. Other closing costs will be around $1,500. You figure $1,500 for "unexpected" costs. Finally, you want $10,000 for your effort.
Subtracting all of that from your expected sales price leaves $66,000. This is most you can pay, if you want a safe real estate investment. You offer $61,000, and walk away if you and seller can't settle on something under $66,000.
Always start at end (the eventual sales price) and work your way back. This is right way to safely invest in fixer-uppers.
Steve Gillman has invested in mobile homes and other real estate for years. To learn more, and to see a photo of a beautiful house (not a mobile) he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com
