I have been marketing for wholesale deals for about 6 months now. And, I possibly have a good deal on my hands! But am too inexperienced to figure out a way to present this deal to the seller! I need help!
Facts:
Owners want to get a chunk of change to pay off medical expenses.
They own a home in Vienna, Virginia free and clear!
The home is tenant occupied with the lease expiring in December! And its a 2 year Lease.
I know the kitchen needs major updating (as its the original from the home). But other than that, the owners have done maintenance on the property and updated the baths back two years ago.
Prices around the area are going from $550-599 for their type of home.
I’m guessing my options are:
- Wholesale to a Landlord
- Wholesale for a mini-Rehab
Nervous about messing this up in the presentation to the Sellers! But I really think this could be my FIRST deal!!! Help!
Hi,
Actually a lot of homes in Vienna Virginia have been being torn down and a new million dollar home built on the lot. Most of the homes in the town area along Maple Avenue driving from Tysons Corner once you go down the grade and past the country club and all the way through town to Hunters Mill Road you have dozens and dozens of homes bought for the lot and demolished and new homes being built.
My understanding is most everything within 6 or 8 blocks of Maple avenue is fair game. Are you looking to assign this property to an end buyer? What’s your exit strategy? What’s your investment strategy? Is this property in downtown Vienna Proper or outside of town?
Let me know as I have a few connections in that area?
GR
Hi GR- Yup, I know that there are houses right down the street being sold for $1.4mil. But the only comp they have, is for $540K and that house was for completely remodeled.
I am planning to assign it to an end buyer- either a Rehabber or Landlord Investor.
The rehabber, however, would have to wait until December when the tenants lease expires, wouldn’t they? But I imagine it’s well worth the wait.
If the Rehabber wanted to knock it down, I’m sure they’d make a killing! So Im counting on that to start looking for my buyer!
I am meeting with the owners in the next couple days to present my case!! I think I will present them with a cash offer for $450K and my max at $500K…Is that too high to wholesale to a rehabber/landlord? What are your thoughts!
The owners really like me and trust me as I have history with them in a real estate transaction I did with them not too long ago! (I have my realtors license as well) But I really want to make this my first wholesale deal!!
If all fails, at least I have a commission at 3%!
Hi,
If your going to wholesale this property to another investor as a rehaber or landlord you need to buy this for less than 70% of FMV, now you say your comp is $540k so you need to make this purchase at less than $378k. That’s $378k minus any cost’s to remodel, rehab, update, repair, replace or cover defered maintence.
Rehab is taking the existing structure and remodeling or rehabing it, new construction would be a tear down and build from new. (Custom Home Builder) I think it’s more likely a new construction candidate, and I don’t think your likely to get these owners to sell this property to you for $378k minus rehab cost’s, and I think it’s more likely depending on lot size, location and accessability that it’s a tear down candidate.
Make sure you talk with your broker first, as I do not specifically know whether under Virginia realtor rules your still legally able to do a listing after making a private offer to purchase as I don’t know what the board of realtors considers conflict of interest or whether making an offer then going back and catching the listing after your offer is rejected violates any anti-trust or ethics rules.
I know most of the tear downs in Vienna have been selling in the $450k to $500k range basically lot value. But if a landlord pay’s $500k for a rental do Vienna area homes make sense to rent for around $4500 a month now? If someone bought a home for $500k as a rental they probable need close to this amount to make their investment work!
That difference between $540k and $378k is why investors only participate in less than 2m residential properties each year nationwide. I think I would just go to list this home for them for a fair price say $525k and take a commission.
For your real estate investing strategy I would start looking at properties in Vienna sitting on a large lot (Land Parcel) that may be laid out properly and situated to subdivide into home plus lot, or home plus multiple lot’s as demand in the area is already pushing the new home (Custom Home) builders in this market to look at this option and I think this is where Vienna Proper is headed, say within a couple miles of town. If you get out to far from town demand to buy and split lot’s decreases as most of the demand is to stay right in that close to town area.
GR
miss_kat,
do you have any idea how much the homeowner wants for the property? I am guessing they need at least enough to payoff the medical bills, but would they sell for that amount if you could close in 10 days?
I think you need to get an idea of what thier bottom line is before you start throwing numbers at them, if you can. Ask them “If I buy as is, pay all cash and close on the day you need to close, what is the lowest you would be willing to accept?” and then stay quiet until they answer.
If they say make me an offer, then offer $378k or less. If they say that is too low, then ask them how much they had in mind. And then stay quiet until they answer.
If they say a number in the $450k+ range, let them know that to get that number, they would have to find a retail buyer which you can help them do, but give them the timeframe it would take to find that buyer and ask them if paying off their medical bills can wait that long. Remind them that the longer they wait to payoff their bills, the bills could go to a collection agency and impact their credit. If they still insist they want FMV, be their agent and list it.
If they don’t want to risk their credit and want to stop the calls from their bill collectors, ask them again, what is the lowest price they would be willing to accept to solve their medical bills problems in less than 30 days, and then stay quiet until they answer.
Good luck.
:shocked
Congratz…
i’m looking for a perfect home on orange county…