I found a property that an investor wants to sell for 33k, he took one contract for 28k and it fell through. The property needs about 40-45k worth of work to be a good retail project and could sell for 165 fairly quickly.
I feel that I could put it under contract for 30k , and resell for 45-50k. My question is what are my incurred costs wholesaling a property and how exactly do I go about it. I posted an add on craigslist to see what the initial response would be from investors at 60k. I have a few that want to see the property which is on a lockbox. Can I go about this backwards by putting it under contract from a buyer first, then buying it from the seller?
What do I do now and how do I go about it by putting myself in the least amount of risk.
If this investor can’t get rid of it for 33k, then you might have a hard time finding a buyer at 45k-50k.
Have you been inside the property? How sure are you of the ARV?
The last thing you want to be doing is marketing someone else’s property without having it under contract. If I were you, I would call up the seller, tell him you might have an interested buyer, and then get an option on it for 28k. Market the heck out of it, and if you find a buyer, great, if you don’t, you are only out your time, and maybe a small deposit.
If those numbers are actually correct, it seems like this deal would be gone already. I would check and double check your numbers.
If you know he already accepted 28 for it, why would you give him 30?
I think maybe you haven’t looked at the house, because it sounds to me like it’s got a serious problem that nobody wants to deal with.
Where is the $40-45 estimate for repairs coming from? If there is structural damage, foundation problem, drainage problem, mold, or meth, it might cost more than that. Don’t take the seller’s word for what it would cost to fix it up. Get your own contractor over there to give you some estimates.
I don’t know what is happening in your area, but the fix and flip guys in my location are not wanting any big projects that will take a lot of time to fix. They are afraid that the market will fall right out from underneath them if it takes a couple of months to get a property on the market. A 45k estimate for repair is not a cosmetic flip.
As to whether or not, the property would be a good purchase for you, I don’t know. I am merely suggesting that you do your homework and be very certain about what it is that you are buying.
I had walked through the property previously. It was full of junk, and a wreck, but overall the place was structurally sound and all major systems were still working.
After the contract fell through the seller had 3 full price, and one higher offer by the end of the day before I could even take a second walkthrough.
The numbers look good, but the seller does not seem to be motivated enough to sell. And one thing you never do is sign a contract backward :banghead, you are putting yourself in a lot of risk if you don’t get the property under contract. If you are really sure about the ARV and this deal looks like a good deal, spend some money to get a professional home inspector to fully inspect the property for any type of damage and give you an estimate on the repairs. If it ends up having a good ARV, get it under contract :deal for a reasonable price with the seller and find a Rehabber and assign your contract :deal. Like tampasteph said double-check your numbers.