Potiential Southfield Michigan Deal ( Could Really Use Some Advice)

5 Replies

Hey BP,

I have a potential deal in Southfield, MI that i would like to wholesale and i am a bit unsure on how i should structure my contract for purchasing this property. 

Seller Wants: $5k

Taxes Owed: $16K

ARV: $53,000

Rehab: $5k

How would you guys structure this deal as a wholesaler????

Please lend me some advice.

All Feedback is appreciated.

This is a marginal wholesale deal. Counting taxes, Seller, Rehab, you are already at 50%.

I try to structure my deals where I can SELL for 50%, including my profit.

And ARV is often questionable. If you erred in ARV, that could make it even worse.

The industry norm would be to use the formula: (ARVx.7)-rehab-wholesale fee=Max Offer

Since this is a thinner deal you need to take into account what your buyers absolute profit needs to be and what you need to make.  Chances are your buyer needs to make X dollars.

Wholesaling cheaper valued properties does not leave much room for error.

Might be a better property to sell to a buy and hold investor or keep for yourself.

http://detroitpropertybrothers.com | MI Agent # 6501395686

I'm not a wholesaler, but I have wholesaled before. I am a rehabber though and property with this sort of distress (read taxes) typically needs more than $5k of work. I'd double check that figure if I were you. $5k doesn't go very far.

As one who flips property who flips property I see a value of $29,000.  This is based strictly on your numbers.

Several concerns I would have. First, the ARV is the largest number and an error can become a big problem. I would also calculate the ARV as a rental. Be careful with expenses. On low priced rentals they usually run above 50% I would want a value of at least the $53,000.

Secondly, I find that most properties I see need more than $5,000 in rehab.

Good Luck.

Bill

I love wholesalers it always just seems to need 5k in rehab