I have been studying wholesaling for some time now and have even dove in a time or two, but never to completion. I have what I feel to be most of the knowledge and contracts that I need at this time, however I wanted to run some of this by you more experienced guys to see if you have thoughts in areas that I may have missed?
I have a motivated seller that has 26 properties that I’m analyzing currently. My thoughts are to determine current market value, current market rents, do a repair analysis on each property, based on that if I work backwards from ARV, allowing for the discount that a rehabber would want and insert my fee, I will come to the max that I can offer him per home.
My exit strategy will be one of the following, I could sell the properties that I can get at a deep enough discount to the rehabber market or if the property can cash flow I can sell those to buy and holders, or end buyers. All other properties that currently dont cash flow, that I cant get a deep enough discount on will strictly be sold to end buyers with a reasonable spread, using one of many techniques.
I’m considering lease options, land contracts, and land trusts. Because I’m a lender, I’m considering coupling one of those options with an FHA203K refinance by the end buyer to address any repairs that may need to be made or remodeling / updating that the buyers may want.
You are on the right track, but it appears that you are stuck not believing that you can get a deal done. Use the same basic steps that you would use to close a buyer on a loan for your wholesale buyers. Also remember that it’s a number game, so the more contacts you can push thru, the more that will actually close
I wouldnt get crafty on structuring the deal. Look at each house as a separate deal, make the numbers work on a cash basis for a buyer and then put the offer in. Your experience as a lender helps with the transaction understanding so a good analogy would be
If a borrower comes to you and says I have a 500 credit score but I want to make the deal work do you
A. Submit and offer to the underwriter knowing it’s no good -
B. Think of a clever way to make a 500 credit score work knowing the borrower is going to default and screw the underwriter/private lender
C. Tell him no but if you raise your credit score to 700 we can talk
The answer I would take is C. because in wholesaling or any deal, it doesnt matter how you structure it if the numbers dont work. Good numbers = a good deal = a happy buyer and everyone is happy. If your offer is too low, move on to the next one.