I have a $150k contract on a property in northern NJ. It’s a 2br/2ba (potentially 3br/2ba) on a 2 acre plot. I was planning on partnering for leverage on a HML with an investor who claims many years’ experience, but as soon as I got the house under contract he seemed to develop cold feet and hasn’t returned my calls. So I’m currently holding the baby wondering if I’ll even get earnest money back and how much more I need to spend on attorney, appraisals etc. (whether I’d just be throwing good money after bad). Fortunately, I made sure the contract had an assignment clause, so I’ve decided to wholesale.
House is in a torn-up condition, needs taking down to the studs and full rehab. A builder estimated up to $100k investment, yielding a profit of over $100k. The interest payments on a HML would be crippling for my cashflow for me alone, so I decided I’ll wholesale the deal for a modest profit, and so am now looking for local investors to wholesale to. So this is too big for me to handle alone, but I believe could be a good deal for someone more established in rehab work.
Would I need to get inspections etc. done as added value for the “wholesalee”? And how should appraisals work in this situation? Would I get an appraisal of the property “as is”, or of "as it would be when rehabbed " and assessing local comps etc.?
Ian, There are some differences between what you posted here and what you posted on Creonline Forum… Which scenario are you looking for? Let me know. . Thank you, Michael
I’m looking for both scenarios. These are 2 separate deals.
The one I’m outlining here is a quick-flip wholesale contract. I was let down by a potential partner and it’s too big for me to handle alone. If I had the cash and contractor crew this deal would be a corker. It’s quite possibly worth even more to pull down the house and build new.
The other scenario is a house that is a much, much simpler job, we could choose to either move in and work on it ourselves or get a HML and get a quick turn-around. I wasn’t really thinking of a wholesale deal.
I also have a third deal which is also potentially lucrative, but I don’t want us to sink before we can swim so I’m now almost in a position of having to turn deals away or try and flip the bigger ones due to our cashflow position.
I Agree, as far as not biting off more… What do you mean by No Fico’s ?? Thank you, Michael
No FICO - no credit score. I discovered that this happens (and works seriously against you) when you pay all your bills and rent on time, and have no debt.
So do you have any credit cards ? Car Loan ? Even if there is no balance, I was wondering if you Own any credit cards??? There are 3 Credit Reporting agencies… Sometimes you will get a “No Score” on 1 of them but you will still have a score on the other 2…
Recently got a credit card and a signature loan, so those would start generating scores within a few months.
We checked with all 3 bureaus.
If you are in No hurry then I would say to wait until your tradelines appear and you obtain Fico scores… If you are in a rush then it is NOT a problem obtaining a mortgage, however, the interest rate will be slightly higher because of the risk factor… But it’s not the end of the world.
Thank you, Michael Greco