Updated almost 14 years ago on . Most recent reply
Am I Doing Something Wrong?
I've got a contract on 2 houses to wholesale and have been advertising heavily for a buyer for a couple weeks (classified ads, bandit signs, craigslist, other online sites), but haven't gotten any calls. I've got comps, photos, and video on a webpage. So now I'm wondering if the reason I'm not getting any interest is that they are bad deals.
House #1 - 2022 square feet, 4/1, very upscale historic neighborhood in Knoxville, TN - List price was $99,900. I'm buying it for $70,700 and selling it for $80,500 (adding in closing costs, hard money cost to purchase, and $5000 profit for myself). I've also included in the ads that I could assign the contract for less. The ARV is $135,000. Repair costs are estimated at $10,000, so profit would be $44,500. Seems to me that's enough "wiggle room" to make a good profit even if things go wrong, which I know they will. So where am I going wrong?
House #2 - 1106 square feet, 3/1 (with room to add a second half bath), quiet street, working class neighborhood - List price was $20,000, HUD owned. I'm buying it for $20,500 and selling it for $32,600 retail or $29,900 wholesale (added in closing costs, hard money cost to purchase, and $5000 profit for myself). The ARV is $75,000. Repair costs are estimated at $28,360, so profit would be $16,740. I've found several retail buyers but am waiting to see which one could get a mortgage. I'm steering them to a local broker who specializes in the FHA Rehab loan. I think I know the problem with this one -- I didn't get it significantly below list price, even though I got it at 78% below ARV (29900+28360)/75000. Am I right?
Thinking about buying House #2 myself, but really don't want to walk away from House #1. My reputation is important to me and it is just plain wrong.
So advice? How did I screw up?
Most Popular Reply
If you're not getting any interested buyers, either your marketing is not getting to the buyers or your price is too high (or both).
Are you confident that your rehab estimates and ARVs are correct? This is where I find most wholesalers going wrong?