Hi BP Members -
I'm ready to make a Wholesale offer and would like someone to look at these figures and comment. Here goes ...
The property is a Cosmetic Only Rehab. It is a PUD ( Planned Unit Development for you newbies ). Well Maintained. I think I did a very good CMA based on MLS comps.
ARV = $350,000
Total repair costs = $15,000 ... I used the buyers own Property Analysis form for the figures. He usually uses $20/sq ft for a Basic Remodel ( new kitchen, baths, flooring, paint in & out and lighting ), but all that is not needed here. The seller just needs to sell and doesn't have time to list the property. I explained the benefits & disadvantages of Wholesaling vs Listing and she understands she will be selling at a discount. I also informed her I would be assigning the contract.
Wholesale Calculator says my MAO is $254,200
My fee is $18,500
End Buyer's profit is $35,000 which is a 12.01 ROI ... he requires 10 - 15% on each deal
End Buyer's Purchase Price will be $272,500. This buyer's MAO is (75% of ARV ) - repairs which turns out to be $274,650
Seller will walk away with $84 - $85k and avoid foreclosure.
End buyer agrees to list with me @ 6% after the renovations are completed.
Assuming I did my math right ... what do you think. The first deal is slightly scary. :-)
Additional Note: I just started my first Direct Mail campaign. With my first mailings I received two phone calls. One was her! The other was the granddaughter of the property ( who recently died and of course stopped paying the mortgage ) living in the property owner's home, but didn't own it.