Ok, new investor here… I was contacted by a homeowner who needs to sale their property. They now have bad health and need to move somewhere that has wheel chair access. Naturally Im looking to wholesale it. They claim it was assessed at 78K, it only zillows for 66,400. They said they were very flexible cause it needed work. I got them down to 50K. Big issue is they owe 42K,“maybe a lil more”. The house is about 768sqft. It needs a roof, a couple window panes, its set for central air but the unit doesnt work, and painting on the outside. I figured about 12K in work? I know its pretty iffy up front but Im lookin at the fact that it can get section 8 to pay between 850-900 per month in rent. Should I go forward with this?
Hi,
First zillow will give you a general idea of market however zillow is known to be pretty close in some neighborhoods and way off value in others! As an investor you need to run actual comps (MLS System Data) in order to actually define real value!
Now let’s use for an example your sellers valuation of $78k,
$78,000 Sellers Estimate of FMV
$23,400 30% Discount Investors seek to buy property for
$54,600 Adjusted purchase price before repair cost’s
$12,000 Repairs as proposed by our Investor “Perfect23”
$ 4,400 Carrying cost’s and overhead to Rehab and Sell
$38,200 The right purchase price for a Professional Aspiring Investor to Purchase and Profit from this Real Estate Investment!!!
Always leave a property open to flip to anyone, the minute you have to make it a rental and therefore a investment you lose over half of potential buyers!
What do you think you should do with this investment after seeing the work sheet above???
GR
I was by a friend of mine who is a realtor/investor that I could do a short sale… Personally, I don’t that Im interested anymore…
Hi,
The people who own this property are unlikely to convince there lender to grant a short sale because they only owe $42k maybe a little more, and rehabbing the current property as per your estimate is $12k. Unless property values fall below $60k which is the amount of current mortgage, repairs and realtor fee's and closing cost's they are not likely to except a short sale deal.
A owner occupied buyer could still purchase this and cover all cost’s at $59k
GR
I’d probably go in for what they owe and trim the rehab costs…you’d be real close to the numbers.
Keith
So you’re saying I should try and wholesale the deal to an occupier?
Hi,
I think Keith and I are thinking your the investor who is buying and rehabing this home, unless you want a $20 (Twenty Dollar) assignment fee, there's no room for an assignment profit in this!
GR
I got it.