Hi guys this is my first post. I have been actively trying to get my first deal done in wholesaling. Here's the situation. I have a seller who has a property 8br/ 2ba free and clear with fire damage. No structural damage. Estimated repairs 40-50k. ARV about 70k. We agreed to 10k. The thing is seller does not want to go through title company to avoid paying capital gains and wants to get paid upon the deed transfer. One of my buyers says they won't touch properties with fire damage. Is this deal worth pursuing? I'm also not in the area as I live in the Bronx NY but am focusing on wholesaling in Buffalo. Any advice would be appreciated. Thanks in advance!
At first glance it doesn't seem like there is much room for profit as a traditional wholesale deal. After repairs there is 10-20k minus your fee minus closing costs minus holding costs. Perhaps you could have the seller come down in price a bit morel? Or maybe you know a contractor investor that might be able to cut the rehab costs?
Originally posted by @Ben Vargas :
We agreed to 10k. The thing is seller does not want to go through title company to avoid paying capital gains and wants to get paid upon the deed transfer.
This does not make sense to me. He is selling a fire damaged house for 10k and is worried about capital gains? Assuming he already collected the insurance payout, how would this hurt him on taxes?
That aside, it does not sound like there is profit for anyone here. Closing costs and holding costs will devour the rehabber's gross profit.
And a rehabber is going to demand title insurance before sinking $50k in improvements into this thing.
I recommend you move on to the next one!
Guys thanks for your input good points!
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