What Would You Offer???
Found a vacant property. It was purchased in '91 for 20k. Quick estimate says it needs 20k in repairs. Comps go for 85k. The owner also owes about 6k in back taxes.
I know that people use the .70-.75 rule of thumb, but would I be responsible for the back taxes as well? If so I would definitely have to factor this into my offer. I want to flip the property, but am not sure how the whole tax issue fits into the picture.
A quick and dirty formula -
85k (after repair value) x .65 = 55k
55k - 20k fix up costs - 6k back taxes = 29k.
So my answer (which I'm sure is not the ONLY answer) is 29k.
Ryan J. Schnabel
Ok good, something like that is what I was thinking. Now I just have to find the seller. Easier said than done sometimes.
-thanx