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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] JBB's in Flat Market? Posted by SeanW on April 17, 2003 at 11:09 AM I have been mulling over the merits of JBB versus the sale, since in my area the sales are approachable (unlike the frenzy in CA). At first, I had been thinking the sale is preferable. You don't have to spend any money buying out the 2nd, and all that equity is up for grabs. But after thinking about it, it seems like the JBB is actually the better return. For example, suppose you can commonly get a 120K FMV house at the sale for 100K. Assuming 8K in prep and closing costs, you could make 12K profit. That would be an 11.1% return on the working capital (108K). This same deal as a JBB would be only 6K in profit using a 50/50 split. And there would be some additional cost to buy out the 2nd and pay the subject-to on the first while marketing the house. Maybe add 2K to the carry cost, and you're looking at an outlay of 10K for the deal. Even though the carry cost is higher, and the profit lower, it's a 60% return on your outlay. Just 3 JBB's like this would return 18K in profit and still leave lots of cash in the bank to cover unexpected costs, or persue more deals. Obviously all my numbers are made up, and deals can be skinnier or fatter based on all kinds of things. But would you agree with the overall conclusion that "Just because you can get houses at the sale without any competing bidders, JBB's may still be the better investment?" Follow Ups: Re: JBB's in Flat Market? Jorge 11:08 AM, 04/18/03 (4) Re: JBB's in Flat Market? SeanW 11:31 AM, 04/18/03 (3) Re: JBB's in Flat Market? Jorge 8:50 AM, 04/19/03 (2) Make equity in the buyout. SeanW 3:47 PM, 04/19/03 (1) Re: TOO RISKY Jorge 11:18 AM, 04/20/03 (0) Re: JBB's in Flat Market? Jorge 11:07 AM, 04/18/03 (0) Post a Followup: Name : E-Mail : Subject : Comments: : I have been mulling over the merits of JBB versus the sale, since in my area the sales are approachable (unlike the frenzy in CA). At first, I had been thinking the sale is preferable. You don't have to spend any money buying out the 2nd, and all that equity is up for grabs. : But after thinking about it, it seems like the JBB is actually the better return. : For example, suppose you can commonly get a 120K FMV house at the sale for 100K. Assuming 8K in prep and closing costs, you could make 12K profit. That would be an 11.1% return on the working capital (108K). : This same deal as a JBB would be only 6K in profit using a 50/50 split. And there would be some additional cost to buy out the 2nd and pay the subject-to on the first while marketing the house. Maybe add 2K to the carry cost, and you're looking at an outlay of 10K for the deal. : Even though the carry cost is higher, and the profit lower, it's a 60% return on your outlay. Just 3 JBB's like this would return 18K in profit and still leave lots of cash in the bank to cover unexpected costs, or persue more deals. : Obviously all my numbers are made up, and deals can be skinnier or fatter based on all kinds of things. But would you agree with the overall conclusion that "Just because you can get houses at the sale without any competing bidders, JBB's may still be the better investment?" Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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