How To Find Rehabers and Landlord For My 50% Off ARV Wholesale Deal

Question

I'm having a hard time finding a buyer for this property:
  http://www.sellpoint.com/propertyDetails.aspx?caseId=2500316{bid}
This property is located in Morrow GA which is about 20 mins outside of Atlanta GA. I'm doing all I know how to do, bandits, craigslist, backpage, kijiji, and pushing to other wholesalers. It's a perfect rehabber, all it needs is about 10k in repairs, even less if someone is doing the work themselves. Any advise would be appreciated.

Mike Jakobczak · Answer

I find it easier to get something sold with solid numbers.  Get a property inspection done, and get multiply quotes on the rehab itself.

Once you have some numbers to back your investment, finding an investor will be a lot easier.

People don't know a deal when they see one, so prove it's a deal.  You'll have your phone ringing off the hook!

Best of luck!

Scott Hubbard · Answer

Well just from the pictures, it looks like $10K might be underestimating the rehabber's costs.

In a flip, you will want:

New appliances, sink, faucet, countertops,cabinets painted = $4K
Flooring = $3K
Interior Paint and drywall & trim repair  = $2K
Bathroom = $1K

All the above is $10K and only addresses the bare minimum.

Assuming ARV is $65K and your price the purchase price is $32K, then let's break it down.

$65K
less repair costs @ $10K less A to B / B to C closing costs, $3K, less commish for B to C $4K leaves a potential profit of $15K.

$15K under the best of sceanrios.  This, in my opinion, may be too low margin becuase this breakdown does not consider:

1. Anything else comes up like HVAC, roof, foundation or other structure, then it could be loser.

2. Seller inventives to buyer.  In a buyer's market, it often becomes necessary for the buyer to get assistance for closing costs.

3.  Carrying costs. Most rehabbers have carrying costs which can be a significant impact.

4.  The house looks to be about 25 to 30 years old.  It also apprears to have a large vertical crease down the side above the rear door.

For me, $15K margin is not enough for me, so this might be your problem with not receiving any interest from rehabbers.

What are the rents getting for a house like this in the area?

As a rental, the repair costs should be less and if rents are in the $850 range, you could have a good rental candidate.  I would play this part up a little more!

Good Luck!

Steve Babiak · Answer

Some reading:
http://www.biggerpockets.com/forums/93/topics/54108-buyer-s-list-how-to-

Orlando Price · Answer

Excellent, Thank You guys for your feed back.. I know what I need to do then. The bath room is proving to be a issue with retail buyers. Its strange how its set up. My GC was with me when I went to inspect the property and the number he gave was 10,347.00 to be exact. But I can see that its best to have several opinions. Ok so off I go back to the drawing board. Thanks all..

J Scott · Answer

First, the pictures are horrible...if you want to convince anyone this is a decent house, put up some decent pictures.  Based on the pictures you have, it appears the house needs an entire cosmetic rehab, which is going to cost a lot more than $10K.  Maybe that's an incorrect assumption, and if so, you should be able to post some pictures that make that clear.

Also, taking a look at the pic of the back of the house, it appears the roof-line is bowed a bit, indicating that there could be some structural issues with the roof.  This is actually pretty common with the ranches in the Atlanta area, after a couple years of bad hail storms and many homeowners adding additional (heavy) layers of shingles instead of replacing old shingles.  So, you may want to verify that the roof is indeed in decent shape.

Most importantly, it appears that you're trying to sell a 3/1.5 in a neighborhood that mostly consists of 3/2 ranches.  This is going to make it much tougher to sell to a landlord, rehabber or owner occupant, especially since brick ranches tend to be very difficult to expand to a second full bath.

If the house were a 2 bathroom house, it would probably make a decent flip candidate (based on a quick review of potential comps) but that lack of second full bathroom changes everything.

But, most importantly, get some good pictures up...you won't be able to convince any experienced investors that a house that looks like that only needs $10K of work...

Jon Holdman · Answer

There are also other houses in the same area for similar prices.  So you have competition.

Scott Hubbard · Answer

Mike took the words right out of my mouth.  I always get an inspection report.

1.  I use it to counter or to just my offer to the seller.

2.  I use it as selling point to give the buyer confidence.

I also get estimates, but most rehabbers know their costs failry well so it may not be necessary.

Also, is the contract assignable?  If so, this is a value-add so I would put this as a selling point.

At $750, it is still a decent deal for many buy and hold investors if the have cash.  Some buy and hold investors want to finance their aquisitions and there are not too many banks willing to originate at $30ish.

Is this an REO?  If not, is the seller willing to carry?  You might have to get creative.

Orlando Price · Answer

Unfortunately rents are only averaging $750 in this area. So with what your saying Ill need to be negotiable with my end buyer. I can come down on the price no problem. The property is solid though, no major system issues at all, roof is 15yo and in good shape. The gutters in the rear of the house are askew, but that nothing major. So the 10k in repairs is a pretty good estimate.

How To Find Rehabers and Landlord For My 50% Off ARV Wholesale Deal

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