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?
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!
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.
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).
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
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!
