I hesitate to post this one because it's not the norm. It's also NOT the kind of thing that most brand new investors can do. That said, I think the story is repeatable and others can learn something.
In early March I got an email from a wholesaler about a very large home in a great neighborhood about 40 minutes north of me. The numbers looked great but a quick inspection revealed some significant issues with the property – hence a great price. The original home was in pretty solid shape but shoddy renovations and a poor-quality addition on the back of the home were real concerns. The Home had been vacant for over a year and there were frozen pipe issues with leaking water in the basement. Still, the math looked great so I tied it up with 5K EM within 24 hours of getting the email. The wholesaler had several other calls but he said he went with me because he "knew that I could close."
I estimated that a proper remodel would take three months and 80K, but could net 100K or more. I had just closed the week before on another large remodel project and subcontractors are always tough to nail down in the spring. I consulted with my retail RE agent @Jordy Clark and he suggested I just do a little cleanup and put it right back on the MLS, because the spring market "is so hot." He told me to put a price that made it "worthwhile NOT to go through the big renovation project."
My purchase price was 264K. I borrowed 100K of that at 1% origination and 11% APR (Pretty good terms for Hard Money). I funded in less than a week.
I quickly capped a couple leaking pipes and did some cleanup in and around the property. My agent had an MLS listing at 329K and a sign in the yard within three days of my purchase. My agent held an open house that first weekend and we had a few offers very quickly.
We accepted an offer at $322,500 and it closed in about 10 days. after commissions, concessions, title fees and the minimal repair costs, we had a true net of about 36K. Not bad for a couple weeks work. And just for the record, the wholesaler made 14K for his efforts.
This week I find myself in between projects so I'm a little sad I sold it, but I'm not gonna complain too much about an easy win.
I don't know if there is a Webster's definition for a "whole-tail" deal but I took my agent's advice to market a wholesale property on the retail MLS to see what response we would get, and it worked out pretty well.
Congrats nice quick flip! Great terms on that hard money!
Awesome and thanks for sharing the detailed numbers including the wholesaler's cut!
Do you think we're in the late stages of the cycle in your market when you can start whole-tailing due to lack of contractors and HOT seller's market? :)
Nice job, @Douglas Larson . I was a few minutes too late to pick up the phone on this one, I think Steven had just barely sold it to you when I called. Nice work. I haven't done a wholetail yet, but I love the idea and it's great to hear that it does work if you buy it right.
Nice! Thanks for posting.
That is great! Happy to see people having success like this in Utah
Re:"Do you think we're in the late stages of the cycle in your market when you can start whole-tailing due to lack of contractors and HOT seller's market? :)"
It's always hard to predict market cycles but unless there's a war with N. Korea or a 9.0 earthquake in the heart of Salt Lake City or a zombie apocalypse, I feel pretty secure that values will hold and continue to climb in my area for another 2 years or so. We always have a seasonal slowdown in the late fall and into the holidays but Feb through September are usually great for sales and appreciation. I have lived in San Diego and also Hawaii and the cycles there (and the prices) are different than Utah. I think there's always opportunities for those who work hard and smart!
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