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Forums » Real Estate Deal Analysis and Advice » What Should I Sell This For??? Can I Get a Pro Answer?

What Should I Sell This For??? Can I Get a Pro Answer?

94 posts by 21 users

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Real Estate Investor · West Orange, New Jersey


Hi guys and girls,

So I have a pretty great deal. It's in a very desirable town and neighborhood. It's a 3 Br 2 ba and the lowest comp in the area is $335K and everything is averaging about 350ish. It needs new plumbing throughout, a new roof, kitchen update, 2 baths updated, floors and paint. The floor in one of the rooms is also slightly slanted. I don't know repairs but I estimated and hope 80K would cover that work and anything else necessary. It doesn't need to be gutted to the studs. I just want to know what I should sell this deal for. I could go with the 70% minus repairs formula and sell it for about $150K (that's also using the lowest comp and not considering that everything in this house will be brand new, a rehabber could probably pull the higher 350K) but at that number I'm making an insane amount of money for a wholesale, although I've heard of people making these profits on wholesale deals before. I just would like to know because even at the 150K mark, the rehabber is still going to have about a $105K spread before he pays everyone, I would think on a worst case he would pocket $60K after the transaction is done. Any advice is appreciated everyone. Thanks.



Rehabber · Albuquerque, New Mexico


I hope someone replies, but be sure to keep us updated with this deal!



Rehabber


Sell it for as much as you can get.

But seriously, I would take 15% of the ARV and use that number as my end buyer's profit. From there you can reverse calculate what you could be selling it for.

How much do you have it under contract for?



Real Estate Investor · West Orange, New Jersey


That's good to know Glenn, under contract for $100k.



Rehabber


Wow, that sounds like a steal of a deal if your ARV numbers are correct.

I would get some GC's out there to put bids on the rehab. Pay them a little for their time since you won't be hiring them yourself. Get the bids in writing and present them to the investors. From your description I think $80k is more than enough, although I don't know the sq ft nor have I seen the house myself. If the bids are substantially lower than $80k you could support a higher sales price from your end buyer.



Real Estate Investor · West Orange, New Jersey


Great advice Glenn, so tell me if all numbers are correct (I'm talking repairs, I know the arv is accurate, checked the MLS), what should I sell this for?



Rehabber · Santa Clarita, California


I am going to make a large assumption that the ARV is real, correct, and obtainable within a 30 day listing period.
With that in mind, I am thinking this home will also need some electrical work, windows, and exterior finish like siding or stucco. If the foundation repairs are minor, your $80k sounds ok unless this home is larger than 2000 sq. ft.
So, if $350k exit, and a rehabber will want it for around 70-75% all in, then they would be offering $165k - $182k. Since you have it at $100k, you stand to make a very hefty profit.

Now, with that said, I will state that I have a very large doubt these figures are correct since you would have been able to lock this up at a 51% deal which is practically unheard of in today's market. In fact, the largest spread I have heard of is one I have been doing which is a 53% all in deal, but the investment capital is $1.3M and not $180k!


Small_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Real Estate Investor · West Orange, New Jersey


Hi Will, thanks for your input as well my friend. Since I became a Christian I stopped believing anything was impossible. As long as the repair numbers are correct, which I will verify, we'll be all good. I really just wanted to know if its okay for me to sell this deal for the standard 70% of arv even though I'm making a boatload of money at that number. If it checks out I probably won't ask anymore than $145k, that way I pass a little more off to my end buyer. I'll keep you guys posted. God bless.



Real Estate Investor · West Orange, New Jersey


Actually Keith, this deal is in Westfield. Union County



Real Estate Investor · Hackettstown, New Jersey


That's fine too, as a matter of fact, that is where he lives. He is all cash, obviously, quick close and has been doing this for 20+ years with there own in-house contracting crew. Up to you. (oh, and don't worry about me, I will make my money when he sells it - I am an agent)



Rehabber · Santa Clarita, California


I never said it was impossible, but do let us know how it goes. If you off this deal at the $160k range and nobody bites, you will know that the exit value and or the repair numbers are off as I suspect. I hope I am wrong for your sake. A $60k wholesale fee is killer on a $100k locked contract!


Small_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Real Estate Investor · Ellicott City, Maryland


I'll ditto what @Will Barnard said...great deal if real numbers, but I'd be skeptical about the numbers being accurate...

How did you find the deal? Why was the seller willing to dump it so cheaply when they likely could have gotten $50K more by just putting it on Craigslist?


Small_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Telephone: 770-906-6358
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Real Estate Investor · West Orange, New Jersey


I'll keep you guys posted. Thanks for all the input.



Real Estate Investor · West Orange, New Jersey


Hey everyone, I actually have another question if you guys would be so kind as to help me brought it. When I meet the homeowner to contract the deal should I bring my own contract, have him sign it and give him a copy or should I have him have his attorney review it first. I just want to know if attorneys would tell their client they're selling the property too low or try to buy it themselves.

Also I have 6 serious rehabbers that want this deal. So what's to stop one of them from contracting with me putting their EM down, just to tie up the deal and trying to renegotiate once they find out how much money I'm making. As I said I'm probably going to max my asking price at $145k and with 80k in repairs and a minimum ARV of $335k it's still a slam dunk for them, but I'd like to prevent this if I can. Thanks for all your input guys.



Real Estate Investor · Ellicott City, Maryland


If the homeowner isn't interested in getting his attorney involved, no reason to encourage it. If he wants to, let him.

As for having a buyer try to renegotiate, make sure you get enough non-refundable deposit that, if the buyer chooses to walk away for whatever reason, you won't mind. I would expect a buyer to put down at least 10% on a cash deal, and I don't imagine a typical buyer is going to walk away from $15K just because they're not happy about how much you're making.


Small_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Telephone: 770-906-6358
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Real Estate Investor · West Orange, New Jersey


Alright J Scott, but im a little confused. i know the buyer puts down his earnest money with the contract but when does it become non refundable, immediately? Just to make sure does the end buyer(rehabber) usually get an inspection period? Im only asking because I dont know and i want to do what is customary, if you say not usually then i'll make sure we require no contigencies. Thanks a lot brother.



· Basehor, Kansas


I noticed you didn't answer how you found the deal. I'm with the others who say it doesn't sound very realistic. I hope you'll take steps to make sure the person selling to you actually owns the property in question!



Rehabber · Santa Clarita, California


Deshone, before you give out the address, you need to be under cintract with the seller and put down YOUR earnest money. As long as they agree, you can simply offer $500 or $1000 EMD and then get that fully executed contract to escrow. Once that occurs, you have equitable interest in t6he property and can market it to your rehab buyers. At that time, you will use an assignment form assigning the contract to the new buyer for your fee and stipulate that they are to place $15k of EMD into escrow that is non-refundable and to be passively released from escrow to you. That places the $15k into your hands right away. if they walk, you keep the money and sell to the next rehab buyer on the list doing the exact same thing.

As for contracts, you should have your attorney draft you a purchase contract or use the standard state RE purchase contract.


Small_be_logoWill Barnard, Barnard Enterprises, Inc.
E-Mail: [email protected]
Website: http://www.barnardenterprises.com
http://www.InvestorExperts.com


Real Estate Investor · West Orange, New Jersey


I do a lot of marketing, thats how i found this deal. I'm not too big on sharing my exact marketing strategies, not yet at least. I'm not trying to be selfish but I'm building right now and going after market share in the north jersey area. I know this is a business of friendly competition but I don't know any other business where people come into an environment and talk about the details of their marketing strategy in the presence of their direct competition IN THEIR AREA. As far as the person really owning the home and all that, not the case here. I have tried a lot of things that don't work for wholesalers in Nj and learned some expensive lessons. I've also been blessed to find out what is currently working.

I would also disagree with anyone who says it doesn't sound realistic, I think a more suitable word would be "typical". I know wholesalers who have made more on deals. I don't think $45,000 is too far fetched if you find a great deal. Is this an everyday or every month deal, maybe not, but will deals like this pass my way occasionally in a $350k market, i have to believe they will and if i dont believe they will I'll never see it and wont have the guts to even make the offer. I made my mind up when I started that if people in AZ and FL are making 5-10k per deal on 100k houses, then My minimum profit on ANY wholesale deal should be 10k in my area where the average home is $250k-$400k. If I can't find deals at 50-65% of ARV then I'm not a wholesaler, I'm a wannabe.



Real Estate Investor · West Orange, New Jersey


Thanks Will, that answers my question. You really have a lot of wisdom brother. I really appreciate the advice everyone and I will certainly keep everyone posted with the results of this deal. God bless.





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