Make an offer or let it go?

44 Replies

Hi everyone,

Newbie to Wholesaling RE and I could use an experts advise. Hopefully this is seen by someone in the Belleville, Illinois area. This my first potential deal, with very motivated sellers. They bought a house hoping to become landlords but just do not have the time. They are pretty much willing to take any offer I give them, as long as they don't have to come out of pocket. However, I want to do right by them as well as myself. I am new to calculating ARV as well. Right now it appears that the house as is on the market is at about 58K in Market value. I can't seem to determine how much it could sell for if it was all fixed up correctly. They also owe around 50K on this property. Does anyone have any specific advise or ideas? In terms of if I should let this deal go. If I should pursue it, how can I accurately determine the price it can sell for once it's fixed up. That way I will know how much one of my potential buyers will purchase for a house in that area?

Just in case this info helps: it's a 3 bedroom, 1 bath, 1088 sq ft, 50K still owed

Thanks in advance for your help!

Jessica Brown

@Jessica Brown

I would recommend going to Redfin and typing in the address. Scroll down to near the bottom of the page and take a look at the "Nearby Sold Homes" and look at similar homes as close to the subject property as possible. This should give you a good idea of what the homes in the area are selling for, and what finishes are being used to capture that price. Hope this helps!

To add to my above recommendation, make sure to pay close attention to the sold date as well and try to stay within 3 months of the date the comparable closed. 

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Since this place is the better part of an hour away that's strike one in my book.

You don't know, or know how to calculate, the ARV. Strike two.

You (for some strange reason) want to "do right" by them. You don't have "investor" in you. Strike three.

You believe the story they told you. Strike four.

The house has one bath and you don't mention being able to easily add a bath or half bath for under $1,000. Strike five.

Do you want me to go on?

Hello Jessica,

In my experience getting into wholesaling of real estate takes a lot of luck, which equals money.  To many variables involved and without any guidance will cost you dearly.  Get some help from local, experienced individuals to ensure the numbers make since. 

@Christopher M. Thank you so much, searching sold homes nearby really helped a lot. :)

@Frank Adams The fact that you took the time out of your busy day for this says a lot. And no I don't need you to go on. That is the one thing I dislike about this forum. 

People like you use it as a means to put people down and try to make them feel small. But thanks for taking the time out of your day to give your input, even though its obvious you didn't have good intentions. 

@John Meirose Thanks John, I definitely plan on taking your advise, so i can get a better grasp of it before I go any further. Thanks again.

Originally posted by @Jessica Brown :

@Frank Adams The fact that you took the time out of your busy day for this says a lot. And no I don't need you to go on. That is the one thing I dislike about this forum. 

People like you use it as a means to put people down and try to make them feel small. But thanks for taking the time out of your day to give your input, even though its obvious you didn't have good intentions. 

 Sorry you feel that way. I've made a lot of mistakes in my life and the only reason I post on bp is that maybe I can save someone from doing the same. 

@Jessica Brown have you considered buying it and holding? I would recommend possibly buying it for $50K if you could rent it out for $800 or more. Do more homework on that market. There should be no doubt in your mind how much the ARV is and roughly the renovation costs. You should also know how much it would rent for, which is also a way to determine value. Without knowing these things, you should not buy this or any other investment property.

@Account Closed #1 i agree with, and I let it go. And as for your #2, you are right, specifically the Bigger pockets podcast, hence why I use their forum to ask questions. 

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@Anthony Dooley Thank you Anthony, I totally agree. I have reached out to someone to help me with ARV, and I am beginning to understand it better now. I am going to take some time to get good at the comps first, before I proceed with anymore investments. Thanks a ton!

Buying something for 50k that is worth 58k isn't really much of a spread. Unless the ARV skyrockets after repairs then it is probably not worth the trouble.

@Max Tanenbaum I beg your pardon? If it rents for $800 or more per month, it doesn't matter if the value ever goes up.

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@Account Closed I have no problem at all with the truth, that is not what this is about. And he's a grown man, i'm sure he doesn't need another grown man to defend him, but thanks anyway!

@Account Closed she doesn't live in Denver. $50K actually buys a house that is move in ready in most parts of the country. It isn't D class where she is. Keep listening to Ben and we will do the investing.

You can have it appraised "as improved" and be sure you take good notes while walking through with the appraiser to talk about what they think would improve value and by how much.  Or just ask them what the biggest increases to value would be on the property and how much each would add, whether they can be done individually (sometimes doing one thing on a list won't improve the value as much as the whole list).  The problem then becomes: you need to know how much those improvements will cost, how long it will take and what the carrying cost will be while it's done.

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Ben Leybovich is no big deal. According to his profile, he has 40 rentals. $1.5M in RE is not exactly big time.

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Some mean responses on this thread.  The BP community welcomes newer investors.  People seek education.  

My impression is that Jessica should probably not buy this house quite yet.   Be prepared to know about tenant screening and property maintenance issues.  Know about evictions.  The list goes on.  I think that Jessica needs a local mentor to help her for her first property.  

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