Holy crap! I just got off the phone with the first person I've ever called about a deal, and I still have butterflies. I am so nervous.
Anyhow, I'd really like some thoughts on this deal. This house is in really rough shape (started out as a rehab that lost funding), so it still needs a lot of work. By the way, this is a wholesale deal
- Estimated ARV: 130,000 (there's not garage on this one), houses in the local area with ~100 more square feet have been selling for between 150k-160k. Her ARV was 135k.
- Estimated Repairs: 50k, I have no idea, this is where I am weakest, I am terrible at estimating repair costs (I need to buy the J. Scott book)
- My fee: 5k
Formula: (130,000 * 70%) - 50,000 - 5,000 = 36,000 MAX
So she's asking $45k, but I called her and she said she had an offer for $35k.
My next steps: I told her that I would meet with her and a contractor on Thursday to really check the repair costs and make sure they're accurate. Also, I want to get in contact with a realtor and run better comps for me, especially since this house doesn't have a garage.
I really wish I had more money and experience to flip this house, because this is a pretty sweet deal I think, and I'm excited for it. I'm trying to remember not to get too emotionally invested in anything.
Can anyone PLEASE let me know if I am missing anything.
I couldn't upload more pics, because they all came upside down.
@Jonathan Westerdale Congrats. I am assuming you are acting as the wholesaler here and are trying to determine what you can offer her and still be able to assign it. At least that is what I am getting. Regarding the repair costs I can probably help you with that. Can I please have some details on the house? How many bedrooms, bathrooms, and sqft. Any exterior landscaping that needs done? Roof or foundation issues (those are your most expensive items)? I recommend when you go to see the property that you take a piece of paper with you and create a very detailed scope of work. My first scope of work was detailed down to the number of outlets and switches to be replaced per room. Once you have a scope of work feel free to send it to me and I can look it over and give you rough numbers. I can tell you that 50k in repairs can get you a TON of work for a 3/2 1500 sqft house with the right contractor.
@Jonathan Westerdale I'm running into the same brick wall (pun intended). I just ran the numbers on a twin I could flip pretty easily if I could only estimate the rehab costs accurately. Still working on my first deal so I'm not confident in my estimating abilities just yet. And it seems a good and available contractor is hard to find.
Have you been to any local REIAs? I went to one meeting and I met two potential contractors who also happened to be investors.
@Jonathan Westerdale what is your exit strategy? Who do you plan to wholesale the house to? Do you already have a buyer lined up? If she is an investor she may not be interested in letting you tie up her property while you're out trying to find another buyer. How are you going to market the house differently than she is? If the best offer she has been able to get is $35,000 what makes you think you'll be able to get $41,000?
Just a few things you should know the answers to before you proceed any further.
@Paul Bowers , I mean I don't have much of an exit strategy, I don't think I need one since I'm not buying the property. I'm afraid of getting a buyer lined up because I don't have the property under contract yet.
Do you have insight into this? Do people typically get buyers before they have the property under contract? Wouldn't they just steal the property from you potentially?
@Jonathan Westerdale I have not been to a reia meeting yet. I'm about an hour outside Philadelphia so city meetings are not convenient. I may try to start my own in the western suburbs.
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