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Possible $100K Wholesale?
Hello BP Members,
Here is the scenario. This one is close to home as it's a friend of mine who has decided he is selling his home "As Is" in the Bay Area and moving. The circumstances surrounding it aren't the greatest, as he was essentially screwed by his wife's sister after she agreed to use her credit to get them into a house that they paid down for $400K over 10 years, she didn't pay the down payment, or taxes an insurance, and now she is demanding more than half the $500K equity after saying multiple times in 10 years she wanted nothing in return. The sister won't let up on the amount she wants, and since the house is in her name, she holds all the cards. Terrible lesson in getting things in writing and never trusting family. The sister was literally a saint before this all went down. Nobody saw it coming. So unfortunately the sister can't even get approved for a $50K loan, let alone refinance to pull the money out, and my friend can't qualify to get his own loan once he pays off the greedy sister.
So here are the numbers...
House current value - $1 million
ARV (every room needs updating) - $1.35-1.4 million
Update/Repair estimate retail finishes - $150K
Update/repair estimate rental grade finishes - $30K
They both don't have money to update the home to sell for top dollar, so they are willing to take the $1 million and move on.
My thoughts are if they sell with a realtor they walk away with about $950K after 5% commission fee.
My offer -
$925-950K (no realtor involved)
Closing in 30-60 days
I get it under contract, put about $30K into it for cosmetic fixes so its rental quality ready, and then assign the contract for $100K to an investor or family willing to put in sweat equity.
Do a double closing and pay the sister $500K equity with the proceeds from the end buyer, I take my $100K fee, and sister pays my friend his portion of the $500K equity they agreed to.
I know I am missing something here, but it seems like this could work and I could profit $75K for engineering the whole thing.
Thoughts?