I found a FSBO property being sold for $155k in the best neighborhood in our area. Comps show an ARV of $265k on the low end and repairs seem to be mostly cosmetic. I'm a newbie and have a few people I've met at local networks and spent time with, but none that I know well enough to partner with me. I'm considering just going the wholesale route with it. Can anyone tell me, do I have to secure financing in order to wholesale the property, or do I just need a signed contract? I can't secure financing for the full $155k. I could do 75k in cash and 35k in financing, so without a partner, I'm wondering if I can pull off a wholesale on what appears to be a great opportunity. Any advice is greatly appreciated! Thanks
I don't wholesale, let that be a grain of salt. It shouldn't matter if you have any financing to do a wholesale deal.
What you need to do is talk with the seller, let him know what you are going to do (find an end buyer for him for no cost to him), and how much time you think it will take to do it. You can word this however you feel like, but the end result should be the same, he gets 155k and the property is sold in 30/45/60 days.
Once you have that contract you then market the property and markup whatever kind of cut the end user can afford and is worthwhile to you.
On the high side how much repairs are needed? How many months will it take to do it? Why aren't you getting a hard money lender to back you and do it yourself? How much will the end investor make if he buys from you, rehabs it including uknowns, carry's the property while it sits empty, markets for a buyer, pays a commission, closing costs 2 times, and sells 5-10% under market so it moves quick?
Thanks for the reply. I think the only reason I'm not doing it myself is because it is a bigger project than I had in mind to start for my first investment. I was looking for something I could do all cash and turn for a quick 10-15k. The reason I'd be interested in a partner with this is not only financial but also the education end of it. Ive read a few books and listened to more podcasts than I'd like to admit, but I feel until I do it, I don't know what I don't know, and I'd like to partner with someone with some experience even if it costs me. It just popped on craigslist today and I know an investor is going to scoop it up, so I was trying to secure some quick info on how to wholesale. I'm doing some quick reading but all advice is appreciated, thanks.
If you don't have a contract you don't have a deal, you just have a lead. You can buy leads for $500 bucks from bird dogs or bird dog sites.
If your not going to go get a contract right away, start calling investors in your area and get one to help you.
Or you know just let the deal go and wait for the next one. My point being you can't know/learn all the details of a rehab/finance/partner/split/profit/disco/song until you get it under contract. If it was me I'd call him up, ask when I can come over, bring some cash with you, tell him what you want to do in the best possible light (I have investors, not im going to find investors). Tell him you need an exclusive contract to buy it within 30 days. If he wants good faith money either give it him, negotiate or don't.
Just my 2 cents. Maybe someone else will come by and post something different.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing