I looked at a property the other day whose mortgage is 79k. It is in good condition, no repairs needed. The owner is renting it out but is tired of being a landlord so he wants to get rid of it. He asked 75k. What price could I offer him and what price should I ask if I wholesale it?
What is the ARV?
The comps show 90k in the neighborhood. The house doesn’t need any work.
chris
He owes 79K?
Yes. The owner owes 79k and is willing to take a loss to get rid of it. I am thinking of taking it under contract and try to quickturn it but I have never done this before. I need to find some investors.
chris
A wholesale property is denoted as a property a investor may acquire for 20% or more below FMV (Fair Market Value).
Generally speaking an investor wants to be at or below 20% after closing so in this scenerio an investor would seek to acquire this property at $68,500 or so to be after closing costs at or below a 20% discount of FMV.
Anything sold above a 20% discount although possible a good investment is not considered wholesale.
If you buy this property for $72k plus closing costs, even if you find an investor to take it off your hands as a rental, you would have to sell it at $76k just to cover your closing costs and your buyers closing costs are probable another $3k so you have to have $79k without a profit.
If you add a $2k profit you make this a 10% below market property and in this economy is no deal!
Pass and go to the next property.
To make this a good deal for an investor you would have to buy it below $63k needing no repairs and being in pristine condition.