OPINIONS ON MY FIRST DEAL???

Good afternoon everyone,

After a good amount of time I’m getting ready to enter my first deal and wanted to know if my projections are right. Check it out and let me know what you all think. Keep in mind the property values in my area are pretty low compared to what i’ve seen in other posts (ie: average SFH in the city= $40-60k).I plan on wholesaling this house.

+SFH left vacant due to elderly man and left in the care of his sons (out of town)
-ARV $40K
-repair cost approx 5-10k
-Offer $23k (70%-5k for cushion)
-Sell at retail for $40k with seller financing OR assign at 28-30k to rehabber

Let me know what you think, but i also have a couple questions. :-\

1)The forms on the net seem fairly general. Are these the same forms that you all tend to use? I know some people have custom drafted forms from their attorney’s but thats not “cost effective” right now in my position. any suggestions?

  1. When i send an offer letter to the owner what sort of wording should i use? i don’t expect to get an offer until the 7th time or so but I can’t figure out how to structure an offer through the mail. ???

Any help is HIGHLY APPRECIATED as i’m hoping that my first actual deal won’t turn into a nightmare. The last thing i want is to become a failed investor stastic!

Thanks for the help!!!

The numbers do not look good. If the ARV is $40k and needs $10k in repairs, how are you expecting an investor to purchase it for $30k?

($40k * 65%-70%) - repairs - wholesale profit desired = offer.

OK, I agree after looking at the numbers a bit closer. I figure it might be a better bet to sell as a “handyman” special to a buyer that will occupy the home. I have a number of ways to get conventional financing for a buyer and even get them a draw loan to do the repairs themselves. I think this might be best as it would basically set closer to retail value for the property.

You need to get much tighter on your repair costs. Approx 5-10k? Which is it?

Legal advice from an attorney is much more cost effective than screwing up a contract.

this deals looks really thin; espcially given the small numbers.

you can drop $5k on a small house in a blink of an eye (even doing the work yourself). I did a good bit of work last winter in a rental o f mine (600sq ft SFR) and dropped $3k and it still looks rough (but better than it was).

I think you rehab+closing cost+holding cost+ purchase price should not exceed $30k (max) and really should be more like $25-27 (in case you have to take an offer at $35-38k to unload it).

I’d offer $12K for it

You could try that, just make sure you can get out of the contract if you can’t sell it. If it will cost you $10-$100 in ernest money, then so be it if it is your first deal. Think of it as a learning experience :slight_smile:

Thank you all very much. I’ll sit down today and try to re-tweak the numbers so make sure my options are open along with making sure i have an clear exit if something goes wrong. I appreciate the information!

10K in repairs just seems odd to me. On a 40K ARV property, that sounds like some serious work. Got any estimates?

And this right here is why some people scare me!!

getting it for 23k

you said 5-10k in repairs so lets say right in the middle $7,500.00

so we are at 30,500 ARV 40k Hmmmmmmm so even if you sell it for 35k you made 5k!!!

how many deals are in your area like this if I could find 5 of these a month at 5k per deal that is 25k a month
ALL DAY LONG I WOULD DO THIS!!!

look at it like this you could do these at 5k each or look for better numbers and do one a year at 25k on one!!!

Hmmmmm lets do some simple math

would you rather make 5k on 60 houses or hold out for the better numbers and make 25k on 2

I would rather make $300k a year then $50k

Do what you do best outsource the rest!! make 5k on every deal and MOVE ON!!!

Very Point Blank. Thank you very much! i’ll make a move on it.

Sorry that was kinda BLUNT!! Ooopps! my bad!

OH MY GOD!!! :o

First time I ever seen you apoligize Robb, LOL!!!

Blunt, but right on if you ask me.

JOhn