Is it worth it to wholesale this property?

Question

Wee have a two part question for you guys.

Here's the back story...

We have the opportunity to wholesale our first house and the buyer is very motivated to sell... but here's the dilemma. The house was orginally built as a 2 bed/ 2 bath with 904 sqft. Our seller purchased the house as a 3 bed/ 2 bath with with a bonus room (the basement was finished in 2009 and ALL of the utilities were updated ). Based on what we've seen have been told by the seller, the house is around 1200-1300 sqft. He bought the house for 125k in 2009 and he is very motivated after a horrible divorce.

Question 1:

Our seller is willing to take what he owes which is around $102k. The Arv is around 117k-135k based on recent sales and the neighborhood.

Question 2:

Does a finished basement and extra rooms add significant value?

Thanks for the responses in advance!

Account Closed · Answer

by the way. ill use myself as an example. when negotiating, the only number i heard was 117k.  when a seller says "  i would like to sell it for around 120- 125k" the only number you hear is 120k.

so in future, when you are negotiating with a seller. dont say " i can offer you around 100-105k".

not saying you did that. just figured id throw that little advice out there

Antoine Belt · Answer

Thank you. You are absolutely correct.

Antoine Belt · Answer

The seller is currently paying $785 but there are rentals in the area consistently renting out at $900-$1200/ mo.

Crystal Smith · Answer

Antoine- The title of your post is "Is It worth it to Wholesale this property"

If your customers are intending to buy and hold then maybe this is a good deal.  Are the market rents high enough to justify purchasing a property from you for >$107K.

If you're customers are looking for properties to renovate & flip then this is a terrible deal that you will never sell to an investor & the basement doesn't matter.

My answer to your post- Learn what you're customers want

Mike Hurney · Answer

@Antoine Belt I think you should get an Appraiser and a Home Inspector. Tell them you're an Investor and it's not a Bank's Appraisal or retail report. If you go through the house with them it should be a real education for you which will help you negotiate a good deal.

Dwayne Gottlieb · Answer

If proper permits were not pulled then the accounted square footage with the assessors office will not match. Puts the Bank in a spot to make a loan for more than the market value per square foot according to the assessors office records. Makes the basement free unless u can sell it for cash.

Account Closed · Answer

@Antoine Belt

i am not sure how much that changes the comps. it all depends on the neighborhood.  up here in new england, one side of the street can be completely different from the other side as far as comps go.

Just remember... Just because someone put one million dollars into a house that is in the projects, doesnt mean its worth a million dollars.  tons of people get that misconception and it gets me really frustrated because they try to call me the donkey

i would try connecting with a cash buyer through craigslist ( or if you have another source) to see what he thinks .  if you can show him that you are a hard worker and that you are willing to bust your balls to find a deal for the both of you i am sure he will give  you a chance and show you the ropes

Robert Blanchard · Answer

Were there any permits pulled for the basement finish?  What does the county call the house, IE: how many bedrooms?  If the basement rooms are not up to code (no closets or windows large enough for egress during a fire), they will not increase the value as much compared to if the correct permits were pulled.  Many times, homeowners will just add bathrooms or bedrooms without getting the correct permits since they do not want to pay for the permits.  This is not smart, since when they sell the house, the unpermitted improvements will come to light.

Just do your due diligence on this property.   If they moved in just after the remodel, the person that did it might have done it properly since you stated the utilities has been upgraded at the same time.

Antoine Belt · Answer

@Gary wilson

Antoine Belt · Answer

Thank you for the response, just got off he phone with he seller and it's actually at 1900 sqft. How much would this change your perspective. Comps in the area for this size home is 130-155k

Is it worth it to wholesale this property?

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