First wholesale deal...

Ok, last week I had got in contact with a landlord who wanted to sell his rental properties.

The first property was in horrible conidtion and IMO needed to be gutted. He thought it only needed $7k worth of work, but I figured a lot more than that, probably closer to $20k even though I dont know what I am talking about. It needed a roof, whole new kitchen including appiances, cabinets, counters, sinks, etc. Same goes for the bathroom and all the wood floors either needed to be resurfaced or covered in carpet. One of the windows was broken, the doors did not have knobs on them including the front door. You get the idea.

The Market Value on the tax assessor website was $41.8k, he wanted $35k. The comps came in pretty strong at $60k. So I figured 70% of that minus $9k minimum and that puts us around $33k. We agreed on $33k but that was factoring in only $9k not $20k+. He also wanted $250-500 for earnest money and I offered $10 with 45 days closing to market the property. He did not want the earnest money and I did not want to offer more because I think the house needs a lot of work. What should I have done? I walked away because I figured there was about $27k profit, but if there was $11k more repairs I had not planned for that would eat into the profits and leave only $15k and I figured it was not worth an investors time.

BTW it is a 900sq ft 2bd/1ba house in a not so good area…

Write a new offer, if you must have the property. The issue should not be the emoney. You will make it “due At Closing”. So NO MONEY DOWN JM !
Deduct all repair costs from the new offer. Get bids that work in your favor, they may help convince the seller. Make your offer as , all cash and wholesale or assign it. Go for 60+ day close.

why not bring in a contractor to write up an estimate for you?

Definitely sounds like more than $7k LOL. Either this guy is a moron or he thinks you’re a moron.

I don’t see where a rehabber is going to make money one this one.

$60k ARV
-$20k repairs
-$5k or so for your profit
-$33k purchase price

$2000 profit for the rehabber and I haven’t included quiet costs in the above.

Even if it’s legitimately $7k in repairs you’re at 75% of ARV, the quiet costs and rehab overages will probably kill that entire $15k left over.

Yeah, I think the guy is a moron. When I met him he was hobbling around on a surgically repaired knee. He hired a bum to do some cheap labor. When the bum wanted to see the money up front he grabbed it and the guy ran away, fell down and broke his knee. So yeah I think he was the moron and maybe thought I was as dumb as him.

As far as bringing in a contractor, I dont know one, but I was planning on getting one.

Call around, find one that will go out with you and give you a free quote.