I Am Going About This All Wrong!
So I get a call from a wholesaler about a hot property he has just locked up in my target market. I get the address, a purchase price of $220k, a rehab estimate of $50k and an ARV of $345k. Those numbers work for my criteria, so I begin the DD process.
The property is listed on our local MLS and there are comparable sales in the neighborhood. One is especially good of a high-end renovation at $295k with similar square footage and floor plan. The highest sale is $330k for an updated home with 1,000 more square feet and a basement. Both of these sales occurred in the last 4 months.
I review the property and form my own list of rehab items and come up with $60k based on what I see. It will, of course, be more than $60k since there are always items that you cannot see.
Doing some math I come up with a best case scenario of $285k Net Sales Price less the rehab and the purchase price and come up with basically ZERO profit. So I call the guy back and review everything and he says its already under contract for $220k.
So I am seriously thinking that I need to revamp my current rehabbing business model. Good deals are hard to find because there are so many people willing to do bad deals. I think I will just start marketing crap deals and save myself a lot of time, because there appears to be plenty of buyers!!!