50% 0FF ARV!!!

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50% 0FF ARV!!!

Chaz Reid
Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes

I'm trying to make this as easy as possible...

http://postlets.com/s/3285-boone-st-memphis-tn-38127/11177494

Email or call for any questions...

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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
12y

@Chaz Reid - If you are open to it, I'd like to give you a little advice. You are posting this property on a public marketplace that is looked at by real estate investors from all over the country and probably the world by now. That is important in this scenario because you are virtually wholesaling a property and it happens to be in a great investment city, but a tough zip code that is going to have challenges.

Anytime you want to wholesale a deal like this and investors form anywhere in the country can look at the listing, you have to be very cautious and super detailed as well as spot-on accurate with your data. You simply cannot afford to earn a bad reputation by putting out bad data. That means, you have to be much more detailed about the necessary renovation, the comps, the estimated appraised value, the picture profile that you show the public. When you put things out to the world and want people to buy from you virtually, you have to give them a reason to have the utmost confidence in you, your data and the deal itself. You need to build a package on the property where all of that data is accessible without anyone having to ask you for it. That is the world of a virtual sales cycle.

I would also stay far away from hyperbole in your headline and the description of the deal itself. Forget all the hype about 50% off and just be super detailed and more buyers will look very closely at your deal.

When you have deals like this one, I would suggest you market it only to local Memphis investors and I would only list the property and your asking price. I would say that you have some information that might be helpful, but every local buyer will be capable of reviewing a deal for themselves. Most won't pay much attention to your numbers or your analysis - only because they will have experience doing it themselves. This is definitely a deal for local buyers only in my opinion.

The brand new investors will most likely stay away or they will pepper you with a ton of questions. I know all about "buyers' responsibility" for due diligence, but in these types of rougher areas, you should do everything you can to sell to experienced investors who know how to succeed and then they will come back to buy more from you. If you limit the sales pitch you will actually be doing new investors a real service by not accidentally selling them into something they cannot handle.

@Curt Davis and many of the other posters are correct on your renovation analysis that is seems low at best and likely has no room for the major work that needs to be done or the code permits that need to be filed, which this property will need a lot of permits. I also agree with @Dean Letfus that all of Frayser is not bad. I try to stay away from the area now because we have concentrated our company on other areas of the city, but there are investors who are able to do well in Frayser. The entire zip code is not bad and there are good areas, but there are also very, very challenged parts of that area of Memphis and it takes a really good property management company that focuses on those rental ranges to make properties there work.

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y

    The burning questions everyone will want to know the answers to (in order to know if it's a good investment):

    - What is the ARV?

    - What is the Market Rent?

    - What are the rehab costs?

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    1Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    This is not a deal. It says that the ARV is 50k and asking price is 25. There's no way that the rehab can be less than 20 on this. So that would put one all-in at 45 on a 50 ARV. No thanks. Pass.

    1Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    Price is lowered. Not too sure why its not updating on the postlet, might have to expire it or something but the price is $17k.

    ARV is $50-60k

    Market rent median for this area is $650

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    @Bryan L. , what would make this a deal then? This is the first ad I've ever posted on the marketplace and I was a little on the worried side that it would get negative feedback but I'm actually glad it did. Its all a learning experience to me. So please enlighten me on what would make this house a good deal?

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    12y

    For a buyer to be "all in", purchase and rehab, for 70% or less of ARV. On a price this low, probably 60% or less.

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    So what you're saying @Wayne Brooks is if I have a property and the ARV is $50k, a good deal will be if they can purchase the property from me, fix it, and stay under $35k? Thats 70% of the ARV... Am I correct?

    0Reply
  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    12y
    Originally posted by @Chaz Reid:
    So what you're saying @Wayne Brooks is if I have a property and the ARV is $50k, a good deal will be if they can purchase the property from me, fix it, and stay under $35k? Thats 70% of the ARV... Am I correct?

    That is correct. So if the rehab on your house is $30k then it's worth around $5k to an investor

    2Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    Even without seeing pics of the inside, my guess is that the rehab will take 20 or more. That would put the value at 15 max. Probably not even that much. If you can find someone else who will pay you more, then more power to them.

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    A buy and hold person wouldn't quite look at things the same way as a rehabber though, correct?

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Chaz Reid - So Chaz. How much is the rehab estimate from your local contractor that you mentioned in the ad?

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    11 to 14k

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    Now I might be a little guy, but the max estimated rehab cost, plus our listed price totals $31k. With a ARV of $50 leaves $19k. Thats a hell of a paycheck in my eyes. Thats counting the highest estimated rehab cost and the lowest estimated ARV. The range is 50 to 65 though. Coach me here @Bryan L. ! I might be looking for the wrong thing all together. Plus all of this has been done 100% over the internet. I have never been to Tennessee, not even drove through.

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Chaz Reid - So, you haven't even seen it yourself in person? There's no way to know for certain without me laying my eyes on it in person, but I would guess that the rehab would be at least 20. It obviously needs new windows. Roof looks suspect in the photo. Don't know about heat/air.

    0Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    So does the fact that I personally have never been to the property bother you or make you feel uneasy about the deal? Like I said this is all a learning experience for me and you're the only person replying so I figured I would use your expertise on this on Mr. @Bryan L.

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Chaz Reid - You know. I guess you are doing "virtual wholesaling". And I guess I'm OK with that as long as the deals are not on the MLS. In the end it doesn't matter so much as whether you have seen the house or not, cause I wouldn't trust your numbers either way. In the end I would have to see it myself and come up with my own numbers. But I still don't believe that 11-14 rehab estimate. This is all academic anyway as I don't invest in Memphis.

    Does that contractor's estimate include materials or only labor?

    0Reply
  • Anson YoungBusiness Member
    Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes
    12y
    Originally posted by @Bryan L.:
    @Chaz Reid - You know. I guess you are doing "virtual wholesaling". And I guess I'm OK with that as long as the deals are not on the MLS. In the end it doesn't matter so much as whether you have seen the house or not, cause I wouldn't trust your numbers either way. In the end I would have to see it myself and come up with my own numbers. But I still don't believe that 11-14 rehab estimate. This is all academic anyway as I don't invest in Memphis.

    Does that contractor's estimate include materials or only labor?

    This is my favorite quote from other investors.... A deal is a deal is a deal.... right???

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  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    12y

    The main problem Chaz is just that it isnt a deal. You can see from the outside pic the place is rough. It is also in a rough area.

    I recently sold a fully rehabbed 4/2 in Nunnellee for 28K to an investor wanting cashflow. Rents for $795.

    In areas like that you either have to be real cheap or have some other twist to make it a deal. Selling a dog which needs everything doing in a C- area for a high price just isn't a deal.

    Assuming the inside is as bad as the outside you could easy spend 20 even 25K on it and now you have a nice rehabbed house in a sh*te area and it owes you over retail :-(

    2Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    12y

    Also the fact you haven't inspected the property or gotten someone in your team to inspect makes you look bad. Basically you are guessing everything and asking investors to believe your guesses and buy based on them. Get someone to inspect it and take a hundred photos, then sell it.

    2Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    Well I've had 3 contractors to make bids on the property. So I should start getting them to take pictures of everything they think needs repair? Then have a dropbox or something with the pictures online? Sounds better?

    0Reply
  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    12y

    I wouldn't believe those estimates. You have no interior pictures in your listing but from the outside looks like crap and definitely needs a roof and windows. You could be at $8k before you even get inside. This house screams deferred maintenance just looking at the roof and what appears to be half *** patch jobs to put off properly fixing it. I'm also not so sure about your ARV. For $5k more than you're asking I could pick up something a couple blocks away that's 600 sqft larger and in way better shape

    http://www.zillow.com/homedetails/3434-Mountain-Terrace-St-Memphis-TN-38127/42228430_zpid/

    Do you have any interior pictures? If so that might help people evaluate it. A couple lazy pictures from the street aren't going to sell a property. I'd just assume the inside is just as bad as the outside and the house is worthless.

    1Reply
  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    I'm truly thankful for everyone who voiced their opinions on this. I will be briefing my business partner here shortly.

    0Reply
  • Haim Mamane Palman
    Investor · San Francisco, CA · Member since 2013 · 147 posts · 97 votes
    12y

    @chaz Reid. I also do virtual wholesaling in Memphis. It can be done as long as it is a win-win situatiation and the numbers work for the end buyers.

    Few tips for you, have your boots on the ground take a lot of pictures for you , the good and the bad, and especially the "big ticket items" such as roof , AC, furnace, electrical panel etc. Most of the experienced investors would be able to estimate the repairs based on the pictures and regardless will send their guys to verify the repairs cost.

    Another tip for you is to look at the investors comps (I.e. The low comps) or the sale price before the property was sold at retail price just to give you an idea where you number should be.

    It's great that you ask questions and seek feedback from experienced investors but don't let anybody push you around :)

    1Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Chaz Reid:
    Well I've had 3 contractors to make bids on the property.

    What level of detail were the bids? Was it just a number or did they actually list the scope of work with prices for each task? If it was more than just a number, perhaps you can post one of the bids so we can see what the breakdown looks like.

    Based on the outside, I'd be really surprised if you could get this in rental shape for $20K...and certainly not retail shape.

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  • Chaz Reid
    OP
    Investor · Fayetteville, NC · Member since 2014 · 916 posts · 190 votes
    12y

    Alright, well apparently we messed up on this on but thats all apart of the learning experience. I now know what investors want in a package per house we get under contract.

    1. Tons of pictures.

    2. Comps, the highs and the lows.

    3. Tax information.

    4. Contractor bids in some type of professional format with a break down on the work and cost.

    5. Market rents.

    If I include all of this in a informational packet per house, no questions should be asked... Am I correct about that?

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    12y
    Originally posted by @Chaz Reid:
    Alright, well apparently we messed up on this on but thats all apart of the learning experience. I now know what investors want in a package per house we get under contract.

    1. Tons of pictures.

    2. Comps, the highs and the lows.

    3. Tax information.

    4. Contractor bids in some type of professional format with a break down on the work and cost.

    5. Market rents.

    If I include all of this in a informational packet per house, no questions should be asked... Am I correct about that?

    Investors don't necessarily need all this information, but YOU do in order to determine if the deal is a good one. What I'm seeing here is that you want to gather all the data, pass it on to investors, and let them decide if the deal is worth pursuing or not. What you're going to find is that most investors will indulge you in this once or twice, but if you keep presenting information on a deal that's not really a deal, they will start to ignore you.

    So yes, all the information above is needed. And what you do with that information is use it to analyze the deal, determine if it's good or not, and then -- if it is and ONLY if it is -- pass it on the to the investor.

    As an investor, here is what I want from a wholesaler:

    - An address

    - A few pictures (to determine the general condition of the house)

    - An estimated ARV (to the nearest 5%...I don't need the specific comps as I won't trust them anyway)

    - A ballpark rehab estimate (to the nearest $5K or $10K)

    - A ballpark market rent (to the nearest $100)

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