Just wanted to share with you a quick wholesale flip case study from a couple months back. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free Living Room Generally, when I am walking a house, I bring a floor leveler with me — or at the very least walk the floor in a diagonal pattern that allows me to more easily feel any changes in elevation. However, this living room was packed from wall to wall in Nascar memorabilia. Lining the sides of the walls were cardboard life-size cutouts of different famous racers, from Dale Earnhardt to Danica Patrick. This wasn’t just on the inside of the property but the outside as well. In the driveway, there was a black race car up on cinderblocks with a kid that must have been in high school working on it. Clearly, race cars and racing ran in the family. Apparently the son was driving this car in various tournaments. The house wasn’t what I would really call messy, but this small living room was jam packed with so much racing memorabilia that it made it genuinely hard to see what work the house needed. There were no signs of stress fractures in the drywall from foundation settlement in the living room, but there was evidence throughout the rest of the house — especially in the master bedroom and above doorway frames where you could see cracks in the sheetrock. Neighborhood Composition To give you a feel for the neighborhood, most of the homes here were built in the 1990s and suffered pretty badly during the great recession. Now, however, the area appeared to be on the upswing. The neighborhood wasn’t unsafe or going downhill sharply, but it definitely wasn’t the pride and joy it once was. The lots were fairly small, and most homes were pretty close to their neighbors. In addition, many of the homes (such as the subject property) had land lines crossing through the backyards. Having big land line polls in the backyard is something I sometimes refer to as a “white elephant” issue. These are intangibles that can affect the price of the property but are hard to put a number on — such as the aforementioned land lines, being too close to a major road, or backing up to a commercial lot. Related: Case Study: Why $30k Real Estate CAN Be Profitable [With Pictures & Numbers!] Because of the limited space, the streets were fairly narrow, with lots of cars piled up on the sides on either side of the road. Many of the fences on the exteriors of neighboring houses were poorly maintained, with portions of them missing or broken. Challenges With this Property There were a few challenges with this property. One of the biggest was the lack of any solid comps in the area. Going back six months, there was absolutely no activity for sold comps. I had to go nine months back. Not only that, but I had to go across a major road to find anything comparable — a major no-no. But sometimes you don’t have the luxury of getting solid comps. When this is the case, I use my knowledge of the area in general and my gut to help round out a conservative number. In this case, I placed the ARV at $120k conservatively. I felt the ARV was pretty sketchy, so I ended up giving one of my buddies a call, asking for his opinion on the property. We ended up walking it together at a later date after the initial appointment when the tenants were away and house was on lockbox. We did all the usual — got a big ladder, took a look on top of the roof checking for damage, did some estimates on the cosmetic rehab price, etc. When he asked me about my concerns, I told him it was chiefly ARV, and it was making me nervous to pull the trigger. He said he wasn’t worried at all and offered to buy the contract from me with a wholesale markup. At first I thought he was kidding, but he was serious. I ended up pulling out an assignment of contract form and got in his car and filled it out with him. Two weeks later, we closed. When he initially decided to do this, he was fairly confident in his projected ARV of $130k or so, but he too wasn’t completely sure given the lack of solid comps. But he told me worst case scenario, he would just keep it as a rental, so either way, he wasn’t worried and had an exit plan lined up. Related: The Higher Earner vs. The Smart Investor: Who’s Better Off Financially? [A Case Study!] After running the numbers, I determined for a retail flip, it would need roughly $23k in rehab to get it to a similar finish out level as some of the other “comps” in the area. After he finished the rehab, he actually got a lot more than I thought he would. He ended up selling the house for around $135k, over our calculated ARV, and surprisingly had no problems with appraisals. Take a look at the offer projection sheet I used to make an offer on this property below: Unfortunately for him, the tenants proved a bit troublesome, and he had to threaten eviction in order to get them out on time since they were giving him some trouble. The other problem was that this was a tenant-occupied property. This can always make it matters quite a bit more complicated — especially when you show the house. Investors: What did your latest deal look like? What obstacles did you have to overcome? Leave your stories below!