I started training 3 years ago with a mentor who gave me the run around, and it costs me too much, without being able to close the 6 deals that we had already agreed to buy and flip/hold from sellers. Top make a long story short, i regrouped and did a lot of research to find someone to mentor me, as well as purchase the properties that i wholesale to him, because of his extensive investors. Out of the 3 deals i have found at 65% of Arv, minus repairs, he keeps dropping the price of the offer, due to various reasons, of which none have to do with my numbers. The first one was built in 2000, and had minimal repairs($300 in paint, carpet stain)He dropped it by $15,000 right a way due to it being a corner lot, near a semi busy street. Then he came back with, adding wood floors,countertops, stainless steel appliances etc… wich amounted to another $15,600 off. We could not do the deal. Recently i found a burn house that is repairable, and has 2 parcels of land, that amounts to almost 1 acre, in a nice area on a court st. The parcel that the house is on, is in the middle of the block, and he also owns the vacant parcel on the corner.After running the tax roll, it was worth $165,100. He did it again, and said it comped out at $150,00, exactly $15,000 less. After shooting the video of the property and realizing it is salvageable, i asked the owner what is the lowest price he would take,and he told me $30,000. I told this well known investor i work with, the situation, and he asked me to offer him $20,000. To make a longer story short, this has been his pattern on every deal i do. Most of the time, the mentors i have dealt with, don’t care if they but your properties, because they are busy collecting fees from all of their students. I am looking to start my buyers list and move on, but i am going to put the burn house under contract this week, and try to assign it to someone who buys burn homes, The land alone is tax rolling at $26,000 per parcel
Hi,
I think the first thing I notice is "Your Numbers" that may be just the problem, you read the comps and someone else reads them differently?
Second thing I notice is your supposed to be wholesaling, but it almost appears you want retail sellers profits? Your fire damage is an example of a purchase for $30k but you want $26k per parcel or $52k for your purchase of $30k? That’s a 73.5% profit? My question is this a reasonable profit for a wholesale property in which you depend on a fellow investor to purchase, rehab, cover carrying cost’s and overhead and hold for probable more than 6 months?
My wholesalers, and I mean the big ones in Phoenix and Vegas, maybe 10 to 15% on a $100k property and less than that on some deals!
It’s time to stop studying and just buy and sell one property at a time for a reasonable profit, don’t let a trip to europe for 2 months drive your thinking about price, use reasonable sound judgement and error on the conservative side and you’ll do great.
Good luck,
GR
There is never a debate on the market value of a house. The value of a house is what people are buying that house for now. That can be found using sold comps. The value of this house is what every other house just like it has sold for in the same neighborhood over the last 6 months. This does not change based on being on a cul-de-sac or a main street (except for extreme cases). What that does is affect time on the market but not the sales price. What you need to do is make sure you are using the same numbers. The only numbers that count are sold comps. Not listing comps, not tax roll numbers…sold comps. After you determine that then you go fro fix up costs holding costs etc.