I have a Potential deal. The house is in a great area. 3/2 1345 sqft on a 7500 sqft lot. The seller wants to sell the property... He is motivated ! Why? Because he does not want to place a tenant with the laws in place that protect tenants from evictions. There is a competitor that has proof of funds already. The house is worth minimum 407k but potential is 430k. I came to him as a wholesaler just like my competitor. The house is in rentable condition and rents for about 2.4k/month. Please advise me what I can do to profit from this potential deal and close. Thank you in advanced !
Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes
5y
You're asking us to tell you how to profit from the deal, but you've only given us two figures; minimal purchase cost and gross rent. You're not providing enough numbers for us to offer the advice you're seeking. It doesn't sound like you've carefully looked at this. Therefore, the best advice I can offer is don't do the deal.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
5y
@Orlen Fuentes Congrats on hustling and finding the first deal. From an investor/buyer stand point (something you'll want understand) the numbers don't work as a rental. The only thing that interests me is CAN I FLIP or house hack? If it's worth $430K you'll need to purchase it way below that. It's the nature of wholesaling. It's not a DEAL until that contract is signed. Good luck man! Find a number and stick to your guns. Good luck.
@Orlen Fuentes Congrats on hustling and finding the first deal. From an investor/buyer stand point (something you'll want understand) the numbers don't work as a rental. The only thing that interests me is CAN I FLIP or house hack? If it's worth $430K you'll need to purchase it way below that. It's the nature of wholesaling. It's not a DEAL until that contract is signed. Good luck man! Find a number and stick to your guns. Good luck.
@Jaron Walling I will stick to my guns and get that number. Hopefully my competition is no where close. I appreciate the advice !
@Orlen Fuentes Congrats on hustling and finding the first deal. From an investor/buyer stand point (something you'll want understand) the numbers don't work as a rental. The only thing that interests me is CAN I FLIP or house hack? If it's worth $430K you'll need to purchase it way below that. It's the nature of wholesaling. It's not a DEAL until that contract is signed. Good luck man! Find a number and stick to your guns. Good luck.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
5y
@Ari Hadar "worth minimum 407k... the house is in rentable condition and rents for about 2.4k/month."
Those are terrible COC returns. As a rental you'll lose money every month holding it. If there's a value add play (extra bdrm, etc.) then that changes things but he didn't mention it.
Rental Property Investor · Boise/Portland · Member since 2017 · 709 posts · 742 votes
5y
You're asking us to tell you how to profit from the deal, but you've only given us two figures; minimal purchase cost and gross rent. You're not providing enough numbers for us to offer the advice you're seeking. It doesn't sound like you've carefully looked at this. Therefore, the best advice I can offer is don't do the deal.
@Ari Hadar "worth minimum 407k... the house is in rentable condition and rents for about 2.4k/month."
Those are terrible COC returns. As a rental you'll lose money every month holding it. If there's a value add play (extra bdrm, etc.) then that changes things but he didn't mention it.
Is the rule of thumb for coc a 1% monthly rent to property price?
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
5y
@Ari Hadar The 1% rule is useful for buy and hold investors, yes. If the asking price is good the negotiation/value add could make the deal worth it. It's everything in my market unless the intent is to flip.
You can take this conversation back to the original post. A LOT of novice wholesalers don't understand it. They think they have "good" deals but actually it's terrible. Some of then actually fudge the numbers... but not all of them. Smart investors won't buy it. The cash-flow or flip profit is slim. I'm a patient person but I can't work 9-5 and rehab properties for nothing in return.
@Ari Hadar The 1% rule is useful for buy and hold investors, yes. If the asking price is good the negotiation/value add could make the deal worth it. It's everything in my market unless the intent is to flip.
You can take this conversation back to the original post. A LOT of novice wholesalers don't understand it. They think they have "good" deals but actually it's terrible. Some of then actually fudge the numbers... but not all of them. Smart investors won't buy it. The cash-flow or flip profit is slim. I'm a patient person but I can't work 9-5 and rehab properties for free.
How do you say it is bad for flip? Have you checked the comps? If the 1% rule does not apply its not good for buy and hold and for flip?
If the 1% rule apply the negotiation /value added is needed to lower the purchase price or see hidden potential to rise his value and rent?
Hello everyone, sorry that I did not mention more numbers. The house could have possibly been placed under contract for 220k.The ARV is 450k. The Comps are at 430-475. I am updating this as I connected with a Realtor and he has MLS comps. The house does rent for 2.4k as is. It is in good condition. The back story is the seller was going to sell the home at 220k, but the Investor who was placing the house under contract failed to pay the earnest money (1K) and the seller became frustrated because he lost a month and raised the price to 355k. 355k is not a good number by any means because their is high risk. Thank you all for your help. God bless