Need new exit strategy - Mistaken Numbers on 1st Wholesale Deal
Background: After months of driving for dollars, I managed to get a what I thought was a decent off-market lead under contract. The plan was your typical wholesaler operation - I locked it up, put deposit in escrow, and set about marketing the contract to my network. I was aiming for a $5K-$10K assignment fee. The owner was aware of the plan. Everything is on the up and up.
Situation: I had difficulty obtaining comps. Nothing in the neighborhood that is a reasonably close match to my deal has sold in the last 24 months. The recent solds are much newer and much larger. So did the best I could to get my ARV and came up with $425K. I am into the property for $235K. So far, so good. I figured a rehab cost of $105K. I ran my numbers and was thinking a flipper could make $35-$42K profit. I'm asking $245K, thinking I could take anything from $245-$240K and make my assignment fee goal.
Results so far: No takers. My contingency period ends Weds 8/28th. I've had 15 buyers walk the property. It's a big project. A studs-out remodel. They're all coming back saying my ARV is high and my rehab is low. It should be more like 330-350K ARV and 150K rehab. So that just totally kills the original plan.
My regret: Last thing I wanted to do was be what everyone says they dislike about wholesalers - pitching crap with inflated, inaccurate numbers. But, that's where I'm at anyway.
What to do: Well, that's where I need help. What else can I do? I hate the idea of going back to the owner and saying I can't make it work. I feel like I need to do everything I can to get this closed. Are there any creative ideas for another exit strategy? My ideas so far:
- Approach the owner for an extension on my contingency period for more time - but that won't change the numbers.
- Owner has the property free and clear. I could offer to do all the rehab at my expense, then he and I sell it together and split the profit.
What do you lovely BP folks think? Any good ideas for saving a deal?