Hey all,
Just got word today that I got an accepted offer on a upper/lower duplex that was bank owned. I have a list of buyers that I will be calling this weekend. Some questions though…
Do I need to still go thru the process of getting financing in place like I was actually gonna buy the property, or do I use my end buyer’s funds for the double close? I will still get insurance and put down the deposit money. Another thought I have is that, my guess here, is that a cash buyer is best to eliminate any seasoning requirments for my end buyer if they were gonna try and go conventional. I’ve yet to do a double close so I want to make sure I get it straight. My title company is good to go and can do the double close. Were closing on March 2nd.
Purchase price is 44.5K
Wholesale of 54K
Worth 70-75K.
Market rents are $395-$420
Needs 3-4K in work.
Your thoughts please,
Nate-WI
You’re not leaving enough profit in the deal for most rehabbers to be interested. Once you factor in holding costs, unexpected repairs, commissions, reduced retail price, closing costs, etc. your wholesale buyer stands to make less profit than you do. You may be able to find some noob who just got out of a seminar last weekend and sell it to him/her for 54K, but then you’re relying on the greater fool theory, which is unreliable at best. You’ll have a much easier time unloading the property if you assign the contract to another investor for ~5K. Save the double closings for the bigger deals that actually support killer wholesale profits that you don’t want your buyer to find out about.
In this case I think he will have to double close or buy it and then sell it. I don’t think the bank would like to see that a profit was made on something they got less for if it was a short sale. The double close is there to hide the selling price from the first lender the short sale was done with as much as it is to hide the price from the buyer, I thought. I do agree that there is not much room on this one, you may have to sell this one to a land lord to make it work. There is nothing there for a rehabber.
My target audience is not a rehabber. Its landlords. This is not a SS. A bank owned property that I bought that had been on the market for some time. I can’t assign the contract either. Non-assignable. I have to do a double close and so far your answers have been informative but haven’t helped me with my questions.
Nate-WI
Is the rent 395-420 per unit or combined? If it’s per unit then it’s a good deal, if it’s combined then :o
No they are separate. Should bring in rents of 790-810 combined. Its my first double close so maybe I should lower my asking price to 52.5K to blow it down the road.
Nate-WI