How We Buy Houses
in Louisiana

You probably want to know how much money you’ll get when you sell your house, just like a majority of homeowners. Or, even better, you’d like to know how real estate investors, or more specifically, how we come up with our cash offers. You don’t need to worry any longer, though. We’re going to disclose our recipe to you.

Our Home Buying Formula

There are four parts to our formula, each of which represents a crucial property factor. We’ll look at each part of the formula separately to better understand it. But let’s first look at the formula as a whole:

ARV – REPAIRS – TRANSACTION COST – MIN PROFIT = OUR OFFER

ARV

A property’s optimum value after repairs is known as the After Repair Value. And it is believed that a property is at optimum market value when it is at its best. In other words, the property is in a condition that doesn’t call for repairs, delayed maintenance, or excessive upkeep. In this condition, the house is every buyer’s dream acquisition.

REPAIRS

The kind of repairs that a building needs are somewhat controversial. Some consumers may not consider some items to be flawed. Others consider even slight defects to be faults. Simply put, we just want to ensure that we don’t start finding problems after buying a house because that will only lead to a sharp decline in our earnings. Additionally, if the eventual damage turns out to be serious, such as structural problems or a significant plumbing issue, repairing it would drain our finances, and we may not end up profiting from that sale. Therefore, we put time and effort into our inspections to make sure that, before making our offers, we account for all flaws and the expense of fixing them. In addition, we occasionally include a few “maybes” in our bids as a precautionary step to account for repair work that has not yet been identified.

TRANSACTION COSTS

It’s common to spend a lot of money during a transaction, especially a sale. And there are several types of charges. First, there are financing fees, which account for 2 to 5 percent of the project’s total cost. After that, one must pay realtor fees, monthly interest, and loan origination expenses. Finally, transaction fees typically account for 15% of the total cost.

MINIMUM PROFIT

The term “minimum profit” relates to our profit margin. We owe it to our families, our businesses, and ourselves to be profitable, but at the same time, we also want to make sure that our clients receive a fair price. Our profit margin has been established at 15% as a result. This margin aids in maintaining pricing stability and enables us to address repair requirements that weren’t discovered during an inspection. Our profit margin is consistent across most transactions. However, when working with hoarder houses, we prefer to give conservative estimates because it is difficult to predict the cost of repairs correctly.

YOUR CASH OFFER

When our transaction expenses and minimal profit are added up, the gap between the two is frequently 30%. As a result, our simple formula for calculating a cash offer is ARV – 30% – Repairs. We precisely calculate our price offers using this formula. Therefore, you may trust us when we claim that we never charge our consumers a surprise fee. Instead, we keep track of every expense, cover it ourselves, and issue you a check for the entire amount.