A quick question. I am contracting a wholesale deal tomorrow and the seller is two months behind on his payment. The property needs a complete rehab. ARV is $235K and I am willing to offer $110K. Small 2 lvl townhouse, 3bedrooms 1.5 baths. My question is, do I have to contact the bank?
It depends on how much the underlying mortgage is. If the owner owes $110k or less just drive on. however, if the owner owes more than $110k , you will have complications with the bank payoff. Do you deal with it as a short sale? You need to know this.
Also, have you checked for other things like tax liens and the like against the proeprty? And do you have a good estimate for the rehab. Given the numbers you have, if the rehab can be done for $30k, you have a decent deal, but if it will cost $50k, then it isn’t good. Most rehabbers want 70% equity to ARV - which would be $164,500, then subtract repairs, closing costs, carrying costs for a hard money loan and the like. Plus you are wholesaling so you need your profit thrown in there. So make sure the costs for the rehab make sense.
You may have already thought of all this, but it is always a good reminder.