Very green, looking at wholesaling a house in pre foreclosure

6 Replies

Hello!

I am so very new, making offers is still a bit scary. I do however already have a couple of investor contacts that are ready and willing to buy contacts from me, given the numbers are good.

I found a seller, duplex is in preforeclosure. It was listed recently FSBO for $150k, then taken off the market soon after. Tax assessment is $276k. I don't have contacts yet in the contracting world to get a quote for rehab, but it seems that there is plenty of room for those costs, the end buyer's 20% minimum, and my $10k. It can be rented as is, with your normal turn over repair costs... If it were to be rehabbed, looking at area comps, the area would support a much high sell price. ($350-$400k) Would you offer lower than the $150k?

Obviously learning... just need to look at real life deals to get a better picture of how this should all go down. 

Thanks!!

@Renee Peter

First of all congrats on getting started. I would treat it like every other property. It seems that you are way too iffy on your ARV and you should narrow that down a lot. Find out exactly what the house will be worth after a top notch remodel (if you are pitching it to a flipper). Its ok to have a 10k window, such as, the house having an ARV of 260to 270ish, but you do not want to have a 50k window. Once you have your ARV just work backwards.

If it is worth 250k after a remodel then take off 70% (since its the price is getting kinda high you might even be able to do 75%) which would be 175k. Then take off your repairs and assignment fee and you will be left with your offer price. It seems like this deal has enough legs to make something out of it as long as your ARV is right and it doesn't need drastic repairs/ updates.

***A word of caution***

Please be extra careful when trying to wholesale a home that is headed for foreclosure. If you tie the property up and can't move it the person is literally LOSING their home because you didn't preform like you agreed. I couldn't sleep if I caused that to happen.

Duplex/Multi properties are holder to wholesale as typically the only person interested will be a buy and hold investor (assuming both sides are rented out). SFR are the easiest to move.

Medium head icon colorRyan Dossey, Call Porter | http://Callporter.com | IN Agent # RB15001099

I have an appointment with them this afternoon. Just looking at numbers before going in. Seeing it was listed at $150k and the tax appraisal makes me think major motivation. 

Originally posted by @Ryan Dossey :

***A word of caution***

Please be extra careful when trying to wholesale a home that is headed for foreclosure. If you tie the property up and can't move it the person is literally LOSING their home because you didn't preform like you agreed. I couldn't sleep if I caused that to happen.

Duplex/Multi properties are holder to wholesale as typically the only person interested will be a buy and hold investor (assuming both sides are rented out). SFR are the easiest to move.

 Thanks, Ryan! I guess talking with the end buyer more would be a good first move.

how do you know that's the only lien on the property. Dealing with preforeclosures is a can of worms. You may think it's a great deal til you find out it's over leveraged. Before I'd get into raptures and licking my chops, I'd do a thorough title search and start from there. Proceed carefully