Fannie Mae prop. just listed in Dec. for 395K. Prop. is in good shape needing only minor cosmetic work (10-15K). We comped it conservatively @ 410K. Offered 285K through REO realtor and offer was rejected w/o a counter. What now?
What is your max offer on this property? If you have room to go higher AND all your numbers are correct, go higher. If not you can’t, either leave this one alone, file it way for now and wait for the price to come down, or you can make an offer every day on it until they either sell it to you or somebody else.
as I mentioned, my partner & I feel that the comps come in at 410-425K conservatively. We are going to paint it and do some minor touch-up. We want to realize a minimum profit of 40K. So I figure this:
$ 305K max offer
$ 40K profit
$ 15K repairs
$ 10K settlement costs
$ 15K holding costs
$385K sales price needed within 4-6 months
is it possible to wholesale it for $320K? It is in one of the most desirable towns in Central NJ and footsteps from one of the top rated public elementary schools in NJ
Just from your numbers I would hate this deal. You are looking at only about a 10% profit if everything goes right. If things go wrong - for instance you find problems with the house that drastically increase the rehab costs - or sales take longer and less money than you think, you have no room and will take a loss.
This would change if I knew the market well, and knew I could sell it easily for the price I was going for. Better yet, if I already had a buyer lined up.
The old saw is if you are buying wholesale then you want to buy at 70% ARV minus rehab and holding costs. In today’s market, most investors are looking at 65%.
That would mean numbers of a maximum purchase at $247 to purchase as an investment - or lower than that to wholesale.
Really, gunning for a $40,000 profit sounds nice. But when you are talking about a $355k investment with lots of risk in today’s market it sucks.
Again, these are general numbers. There are still parts of the country and certain portions of the market that are still strong. If this is in one of those, then you should consider it. However if it is not - if there are homes on the market that are taking a lot of time to sell - I think you need to rethink your approach.
As far as what to do when an REO rejects your offer, the best approach is to keep after it. Keep an eye on it for a couple weeks then make another offer. Especially, make an offer if you see something happen to the property - like kids break in and damage it, or something. If it sells for more than you should buy it, then move on. But what happens alot is the house sits for awhile, then the owner/lender starts getting antsy and will start reconsidering their selling strategy. If you keep after them, after awhile, since you are likely the only one who kept up with them, they will counter an offer, or ask you to make your “best” offer. Then you are in business.