Wholesale for profit or rehab for bigger profit?

3 Replies

So my partner and I have 2 deals on the table that we were looking to rehab, however we received an offer from another investor that would allow us to make a $44k profit now

or we could rehab and look to make $90k or more by rehabbing. Trying to get others opinions on what they would do in this situation, or variables they would analyze.

Deal Details:

House 1) Purchase: $50k, rehab $50k ARV; $165-170k

House 2) Purchase: $134k rehab $30-35k ARV; $280+

There are a lot of factors that go into this decision. Do you need cash now to grow your business or are you OK waiting 3-6 months? Do you have lenders in place for the purchase and the rehab? Do you have the working capital to begin until you can pull from repair escrow? 

Do you have experience? Can you handle 2 rehabs at the same time? Should you WS one and rehab the other? 

Do you have the crew to be able to handle 2 projects?

How good are your buyers? Have you vetted their funds? Are they able to close? Are they willing to put down large non-refundable earnest money?

These both look like great deals from a strict numbers perspective. Do you feel certain about your numbers before you get into a rehab? How are houses selling in the market? Are the ARVs you used priced to sell quickly?

To me, you have 3 great options in front of you so it is a matter of personal preference:

1) WS both  2) Rehab both  3) WS one and rehab the other

Seems like no matter which way you go you'll do well as long as you have considered the questions I posed.

Lou thanks for chiming in.

Yes, we have funds to start rehab, lenders available, and crew in place to do so (my partner is a licensed contractor, and thats how I met him....he was one of my top buyers)

Originally posted by @Terry Royce :

So my partner and I have 2 deals on the table that we were looking to rehab, however we received an offer from another investor that would allow us to make a $44k profit now

or we could rehab and look to make $90k or more by rehabbing. Trying to get others opinions on what they would do in this situation, or variables they would analyze.

Deal Details:

House 1) Purchase: $50k, rehab $50k ARV; $165-170k

House 2) Purchase: $134k rehab $30-35k ARV; $280+

Here's what we do in these situations. Figure out what your annual ROI would be for selling it now, versus your potential annual ROI if you sold it later. Don't just determine the ROI, it's important you determine the annual ROI. Time value of money is important. If the annual ROI from selling it now is large compared to the potential from selling it later then sell it now.

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