I need help figuring out a good price to pay for a property that doesn't need any repairs or updates. Its estimated value is 190k. The owner has about 18k equity with a mortgage balance of about 173k. Projected monthly rent is $1,387. It is a FSBO property so I want to know what I can offer her that would be a good price for her but also low enough so I can wholesale it to an end buyer.

If you can provide details it would be great because I need to know how to run numbers on rental and/or turnkey properties.

Thank you in advance!!

@Amanda Glenn , this doesn't look like a good candidate for wholesaling. There's basically no spread. Move on.

@Amanda Glenn

Most investors want to see the price reflect 1% of rents so that's around 138k . Of coarse there's so many factors than just that . Most want a certain cap rate as well when evaluating a property

I made some general assumptions about taxes insurance and maint reserves. NOI would be around 10K /190K = 5.26% Cap.

I would imagine most want around 9-10%.. value (from investment standpoint) would be 99K-111K.

I would pass, I hope this helps.

The bigger answer is- when you're dealing with residential properties, the market determines the value. You can't just make up numbers to buy and sell residential properties outside of what the market has determined it's worth. 

That property doesn't look like it will cash flow, even if you only offer the $173k. So you'd have to know why an investor would want to buy it. If no cash flow, and doubtfully much equity... may not work.

For general rental property calculations:

https://www.biggerpockets.com/renewsblog/2013/01/1...

Hope that helps.

Amanda,

Every property will always need some extent of repair. I would never pay full value for a property in the markets I invest in.

With a monthly rent of $1300, you would need to sell the property to the investor at 130k (if that particular investor's strategy is based off the 1% rule). Don't forget to tally up any repairs, closing costs, and your profit into the deal.

Before learning how to wholesale, everyone should learn to invest in properties themselves. There are so many different types of investors in the market with vastly different investment strategies. Try finding a good wholesaler in your area and ask them to show you the ropes. Remember to add value to their business so they are more inclined to help teach you. You can do this by door knocking, sending out flyers, or driving for dollars.

You would have to get this deal for half of what its worth and a FSBO is likely trying to drain every penny from that deal to avoid Realtor fees. Hope this helps! Keep educating and don't give up!

I agree with @Jaysen Medhurst : you need to find a property well below market value so you can sell it to an investor and the investor can still feel it's a good deal.

The seller owes $173k and the value is $190k so that only leaves $17k for her profit. She's selling FSBO because she wants to walk away with something. Even if you bought it at $173k, that's not low enough to entice an investor to buy it at $173k.

The point of wholesaling is that you find GOOD DEALS. If the house were valued at 190k and you could buy it for $140k and sell it for $150k then that would make investors take notice and you could turn a good profit. 

There is no meat on that bone for anyone . 

Rent of $1387/month equals $16,644/ year gross revenues. Net Operating income will b about $10K. With a $10,000 NOI you want a CAP Rate of 8% . That translates into an offer in the range of $125,000.

Thanks everyone!