I have a potential Class A property near San Jose's Rose Garden Neighborhood. I estimate the ARV to be 1,250,000 on the conservative end. Owner states they have remodeled Bathrooms and bedrooms but only permits I see pulled are from 1980. So I am assuming these are still in need of updating. It is a 2 bed 2 bath 1500 sf. I am throwing out a rough number of 200K for repairs since I haven't seen it and he wants an offer before I view it. I am planning on wholesaling it since all my capital is currently tied up. What would you want to have as a desired profit for this house? What would you recommend a fair wholesale fee be?

Sean,

That's a great area...i grew up not too far away! Does RM still have the county contract?

The seller wanting an offer pre-inspection is cause for concern. He must be talking to a few different buyers & fishing for a price.

A $200k rehab budget seems rather high, even when accounting for local labor costs and assuming a 3/2 conversion. Can you see obvious items needing repair (like the roof) when driving by?

The last 2 questions to your post are difficult. A flipper needs to know what repairs are needed. A desired profit is somewhat a function of the risk taken. I imagine most people don't care too much about the wholesaler fee as long as the deal makes sense to them. What's normal in SJ might be outrageous in other markets. 

With your background in construction why not get a cash investor or hard money lender involved and take down the deal yourself?

Sorry if I can't offer definitive answers to your post...more info needed. 

Good luck! I hope you can get it under contract!!

TJ

Purchase price?

@David Weintraub  that’s what I am trying to figure out. What to offer this guy based off what the minimum someone would be looking for as a profit on this type of property. This would be my first A class property 

I lived out that way for 7 years, and recall that knockdown homes near Stanford, for example, would fetch that for LAND! 

I cant' really figure how this gets wholesaled.  Is the property a mess?  

I Think this will be specific to your location. I see the TV shows, and the flippers in CA seem to be happy making $50-75,000 on flips with the ARV over $1,000,000. I can say I would need a much larger pay day to spend that kind of money.

Do you have a list of buyers (you will need these to wholesale)? Why not ask them what kind of profit they look for? I would want to know that up front before being "stuck" with a house you can't sell.

@Sean Carroll , simple. Step #1: find out what the land value is. Step #2: find out whether developers would treat it as a knock-down. Step #3: subtract the cost that a developer allows for for knock down and re-designing/approvals. Step #4: work out what your desired profit is. Step #5: subtract the values of steps 2, 3 and 4 from the value of step 1, and voila! you have arrived at your Maximum Allowable Offer. Step #6: submit an offer as much below your MAO as you dare. Step #7: repeat step 6 as many times as necessary. Step #8: walk away if step 7 fails. ie. Simple!

[Hint: consider using that approach - even if it's not going to be knocked down this time around!]