Buying from wholesaler

[Bryan H.]

Looking to make my first offer to a wholesaler.

I have purchased off the MLS before and included contingencies for financing, inspections, title, etc. Are these expected & normal for wholesale deals too?

Here's my deal broken down, let me know what you think. Am I missing anything? I am looking at 100% financing with HML. Figuring 9 months for hold

ARV $163,000
Minus 70% $114,100
Minus Rehab $30,000
Purchase $84,100

Buy Costs $1,682 2%
Points $3,423 3%
Payment $10,563 12%
Taxes $1,800 $200/month
Insurance $500
Contingency $3,000 10%
Sell Costs $14,670 9%


Investment $149,738
Profit $13,262

[J Scott]

Originally posted by Phil Z:

I would never buy a flip with a $13k profit. You're absolute minimum should be $25,000.

If you're flipping a property in the $100K range, this would mean that you'd need to generate a 33%+ COC return. In my experience, these types of returns in that price range are very uncommon.

If I had never done a rehab for less than a $25K profit, I'd have probably given up nearly $750K in profits in my career...maybe you'd be happy giving up those profits, but I'm glad I made them... :)

3. I can't figure out why your re-sale costs are so high. Commission (4.5-5%, Closing $1,500 (~1%), Conveyance Tax .05%) = 6.55%

It's not uncommon for resale costs to include any/all of the following:

- Commission (4-6%)
- Seller-Side Closing Costs (Up to 2%, depending on location)
- Buyer Concessions (Up to 3%)
- Home Warranty ($400-500)
- Appraisal Fee, if FHA Flip ($350-450)

That can easily end up being more than 6.5%...