BiggerPockets

Guys,

I'm simply not going to give up locating a good deal for my buyer. I met w/ my buddy (REO agent) last week and he took me to one of his homes. 3BR/2BA (20yr. old home), rancher w/ deck (needs work), two car, decent community, good schools, close knit comm.. Hasn't been listed yet...agent and I are friends, but business is business and he wants to see if I can deliver. The numbers are below. Did I miss anything? Please let me know:

ARV - $120k
PP - $42.5k (also includes DP, CC, Insp., LF, RE Comm., and Appr.)
Repairs - $11k (this includes a 15% markup and addition of SS kitchen appliances - always my recommendation)
HC - $1440 ($480mo x 3[Avg. DOM], Taxes, Insurance, Utilities)
Selling Costs - $9900 (RE Comm., CC, Warranty)
Wholesale Fee - $5k
Total Cost - $69,840k
Sell below market @ $110k
Potential Profit - [b]$40,160
[/b]

63% ARV

Keep in mind that I can save him some commission cost due to me being an agent.

P.S. Spent most of this morning putting up more bandits signs and speaking w/ folks that are still responding to my rent-to-own signs that I put up a couple of weeks ago.

Hey JScott (The Man),

Glad that you were able to chime in:

1. The ARV is accurate as I pulled the comps myself since I'm an agent.

2. Wholesale fee is included as I am flipping to an investor.

3. Keep in mind that I have a team in place that includes a contractor - even though my contractor is my "go to" guy, I still have another contractor carry out a walk through for me. Just in case......so the numbers are pretty accurate. Mostly cosmetics....roof is in good shape, etc...biggest thing looks like we'll have to patch some walls as it looks like someone to a baseball bat to the place before they moved out, some doors are missing, and carpet throughout will need to removed.

4. End buyer is an investor....I'm not sure if he's taken out a loan or not. Even so, I'm outlining this as if he is taking out a loan. If cash, then cool....I can pair him w/ a local bank to bypass any seasoning issues. I will adjust the holding cost as you mentioned and explain to him why if he ask.

As mentioned in an earlier post, he knows that I have tenant buyers (I have qualified buyers now)/retail buyers too...we can do the property management and my wife can do the staging, if needed. So we have it covered.....I just wanted to run this by the big guns (you guys) first. As I am committed to not sending him crappy deals and wasting him time....

If I can get his deal for him and show my buddy (REO agent) that I can deliver, this triangle will be a good one. :-)

Thanks, JScott.....appreciate your advice.

If you go to my latest blog post (the cat pee house) that house costs us about 20k and it was a light rehab (There was an additional 15k to remove the septic and hook up to the city. But the construction was about 20k)

I do a lot of these and get great prices. I also know my costs to the penny.

To add to what J Scott stated:
What about exterior paint, stucco repair, etc.
What about landscaping (curb appeal is muy importante!

Even if the rehab was $20k, you have yourself a good deal and if it was in my area, I would be all over it.

JScott, Curtis, and Will,

Thanks for your responses.....As for the rehab, the contractor is my father-in-law and he's been doing this for nearly 20yrs.. He's good at what he does, but he also provides cost effective estimates...here's his break down. Investor is getting materials as needed:

*Painting (including wallpaper removal and patching)
3BR/2BA
Two LR
Hallway/Entryway
DR
Total - $2150 (we have most of the materials on this)

*Popcorn ceiling removal = $1200

*Laminate flooring installation (w/ removal and disposal of carpet)
1550sq. ft. x $2ft = $3100

*Four door installation = $800

*Painting and repair of shed = $200

*Fence replacement (144ft) = $500

*SS apps = $1750

*Total = $9650 x 15% = $11,097

Outside looks good....I should add in some landscaping, Will. I'll make the adjustment...windows are good, roof is good. Inspection will bring out costs, if there's any other functional issues....if there are electrical issues, we can address as we have an electrician.

JScott, I would love to do this myself, but I simply do not have the funds, nor am I in position to do so (from a credit standpoint - me and my family lived from hotel-to-hotel some years ago and we're still recovering...almost there....finally know what my purpose is in life and that's REI), YET. I'm working to get some cash, currently repairing my credit, and then will start doing what you suggested. I'm holding off w/ increasing my wholesale fee, because I know that he's outlaying funds for some materials.

Will, outside is in good shape. Not stucco, full brick. Exterior paint not needed, except for the shed. Again, yes, I'll adjust as landscaping will be needed.

Anything else I'm missing?

Dave -

I'm still a little confused...

If you're wholesaling this property, why is your father-in-law doing the rehab? And why are you shelling out $$$ for the labor costs? Wouldn't you just assign the contract (or sell the property) to your end-buyer and then let him take care of the rest?

If you're putting out some of the cash (for example, for the rehab) and/or taking some of the risk, you deserve more than just a wholesaling fee.

Or perhaps I'm just misunderstanding something...

Curtis - the OP for this stated in this thread that he is a licensed agent - but he still wants to wholesale this one.

But I have to agree with you nonetheless ...

Steve and Curtis (your tag lines are hilarious),

Yes, I am a licensed agent, but my funds and credit are limited.....see my earlier post. Wholesaling (to be more specific, all the due diligence done) is not a pain to me. When you do something you enjoy, you don't view it as a hassle or "pain in the neck"....so my investor may be makin' off w/ some good profit and I'm receiving not as much as I should for my fee.....I understand. But, I'm learning the ropes and will adjust going forward. Guys, after what I've been through in my life, this is truly a piece of cake. And as an IT projects guys, the planning, number crunching, etc. is easy. I wanted you all to review and pinpoint possible pitfalls and you've done that. I appreciate it.....anything else before I contact him?

Got it.....thanks, J.

Will let you know the results later this week.......

Thanks, Tyler. I don't have the contract yet. Don't want to do that until my buyer wants it - then I'll get it under contract and double close. I'll get a discount for the B-C close at the title company - as a result of doing IT support work for them, I had a chance to meet and explain my business to one of their closing attorneys. He gets it and knows that it could be a good thing for the both of us. It'll be private funds or worst case, transactional funding (that'll eat up a good portion of my profits). The hardest part of it all is getting enough capital to do deals yourself - it's teaching me patience, though - it's finding the RIGHT folks to fund your deals and your ability to put in laymen terms what you're doing and showing how/when they'll get paid. Regardless, I wish you the best in your endeavors as well.