Formula
The origial formula is a very correct formula for a starting point.
Never have the purchase, rehab, holding, and real estate cost be greater that 70% of your ARV.
Make sure you figure an ARV with accurate numbers not optimistic numbers from a listing agent or buyers agent trying to get a commission.
You need the 30% spread to make a profit and keep you in the green if you make a miscalculation, or find a repair you didn't intend to. Sometimes that 30% dwindles down to only 10% because of a suprise problem.
And yes these deals are out there in every market, don't let anyone tell you different, you just have to work to find them - bandit signs, direct mail letters, driving for dollars, flyers on vacant houses, mailing to people with delinquent taxes, watching the probate records, the foreclosure records, etc.
But you cannot wait for a real estate agent to bring a deal to you. They only see the properties in their computer, to find a good deal that fits your formula, you have to market yourself so the truely motivated sellers will find you.
As for your CFP, The CFP cannot sell you real estate very easily so he wants to sell your stocks, bonds, reits, etc and make a commission. Plus as real estate is risky, he probably will not want to advise you to buy something that could loose you your shirt if not done properly & have you sue him.
As for your CPA - you have the wrong CPA. Check with your local real estate investing group and learn who the heavy hitters are. Ask them for advise - who is their CPA. Then make an appointment and interview these guys and find a new CPA that understands real estate and asset protection.
I just switched CPA's and after 4 years of not writing off a lot of things that I thought I should be able to, my new CPA found about 6 more tax deductions that the old guy had never mentioned.
Change is good.
Network at your local investor club, you may find an informed CPA or CFP that are members.
Kim Tucker
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What is you take on the infamos "no equity deals" that are all over this site?
[addsig]
I have a job that keeps me busy. I still like investing in RE, my wife helps me with day-to-day stuffs. A couple of handy guys help me with management. They know plumbers, electricians. They recently bought a couple of houses, rehabbed and sold. I know they would be interested in going to business with me rehabbing properties.
I am thinking whether I should buy and contract them or let them find properties and do the rehab work, sell and give them a share of the profit; I will come up with the money and stay involved as an active investor. They are interested in either venture. What would be a good profit-sharing formula?
Merry Christmas all.