I’m new to RE investing in the Tampa, FL area, but I’ve read a ton and know pretty much know my strategy. The simple strategy is doing some rehabs to generate cash flows for more rehabs and rentals…rinse and repeat.
Anyways, my question is how can I find wholesalers (or other sources) in the Tampa Bay area for rehabs?
I already found one but his numbers don’t work out because he uses the highest comp in the area for his ARV (which might be a house on a canal with 500 more sqft). I work my numbers by the average ARV of similar homes. After I calculate (purchase price + repairs + holding + closing) the home is at retail with no profits. He won’t budge on the price though because I assume other investors buy them regardless in this fairly hot market and might assume his ARV is realistic.
One last question, doing rehabs don’t you expect to make a profit at least equal to your repairs cost (for each dollar of repairs you should at least make a dollar of profit)?
Thanks in advance!
You are on the right track with the deal you passed…if he is comparing his property to properties that are not “like in kind” and then adjusting up or down for amenitiies, then they are NOT comps!
Pass on his “deal”…if he is high and won’t budge, he is “burning your daylight”…he will probably get his price, especially in a hot market – there is always a greater fool – don’t be the greater fool. Trust your gut.
Your profit is going to be a factor of negotiated purchase price, the cost of the rehab, and the ARV…if you pay too much or over-rehab, it will cut into your profits. Put your money where the money is - generally, the kitchen, the baths, the bedrooms, other amenities – in that order. Men pay for the house but women chose/buy them.
Good eye on checking those comps carefully, I’m sure many folks have been less careful and gotten raped on deals.
I live in Fl as well and am also looking for deals, but it seems everybody’s on the bandwagon these days, if I only wouldve bought all those HUDs 3 years ago…20/20 hindsight.
Heres an interesting thing Ive noticed about comps.
When Ive had realtors give me their CMA, theyve always comped it with a house that was older, in worse shape, not as clean as mine, lesser construction materials (frame vs block) etc.
The idea is that they want me to sell my house for 10 k less than what its worth, since its a slam dunk for them, and they only lose 5-6 percent on 10k (500-600) dollars but get a quick sale in return.
Now, lets look at the wholesalers (your situation)
This guy cherry picked properties that, like you say, if they vary in square footage (I never comp anything thats not within 100 sq ft of my property), or is waterfront, or is in the same area but a higher priced subdivision, he gives the impression that his property is worth exactly that.
Comps, CMAs, appraisals…theyre only an opinion…and thats it. And, you know the old saying about opinions…
Youre doing the right thing…do your own comps via public records, the MLS (for pending and current listings), etc.
What I usually tell somebody if they say their or my property is or isnt worth this or that, I always say, great, lets hop in your car, go take a look at these comps, and then decide.
That usually shuts em up right there.