I found a house I want to buy and flip it is going for 79,900 I want to offer 70 for it. I think if i can dump about 30 into it I could get about 130 to 140 for it. Here is the problem the seller does not want to sell for anything less and wants all cash now this place has been on the market for awhile. Now to me that is a big red flag. That tells me there is more wrong with it than meets the eye. But again I am a beginner and can be looking at this with too much caution. What do you all think I want as much input as possible. Thanks Jon
All cash or all cash and no contingencies? Big difference. You need to really understand what you can sell it for. If you can get it for $70K and the arv is $130K then the numbers are tight, if it is $140K then you have a little wriggle room. Almost everyone runs over budget in their first houses so make sure that $30k will get everything done.
@Jon Mccarthy Make an offer that is comfortable for you based upon the numbers you have calculated. If he does not want to take it yet just let it sit and move on. Mistakes happen when you want a deal so bad you make the numbers work in your mind when they really don't.
There will be other deals and passing on a deal will not cripple you, but overpaying might.
Remember also that if you pay the asking price, then only spend the $30k, then ask $140k, your Buyer/s aren't necessarily going to magically agree to pay your asking price (any more than you want to now)!
When you say "I am a beginner and can be looking at this with too much caution", it might instead be the case that you "are a beginner and are looking at this with NOT ENOUGH caution"! I agree with @Cal C. on this one; the numbers look very tight unless EVERYTHING runs smoothly. For a first project, please don't count on that! Cheers...
I never purchase a building unless it meets three criteria:
1. Do I think I can I flip the contract
2. Do I think I can flip the house
3. If I am wrong with 1 and 2 will the house have positive cash flow as a rental
If you cannot wholesale the contract you have probably paid too much for the property and you have no equity at closing. This is not a good position to be in and if the house has been on the market for awhile and the seller is not willing to come down $9k I would say walk away from this one.
@Jon Mccarthy the fact that the property has been on the market for a while does not necessarily mean that there are "hidden" issues that should raise a red flag. The issue seems to be a seller who is unwilling to budge from the number he wants for his property. Don't give the seller so much control. Make the offer you feel comfortable with and stick to it. If he is unwilling to budge at all you may have to walk away. There will be other deals if this one doesn't work out. Good luck.
Wow great response from everyone thank you all so much I am going to walk away from this one it just does not feel right. I do appreciate the insight and help with this. Thank you all.
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