Real Estate Investor · West Orange, NJ · Member since 2012 · 130 posts · 19 votes
Hi guys and girls,
So I have a pretty great deal. It's in a very desirable town and neighborhood. It's a 3 Br 2 ba and the lowest comp in the area is $335K and everything is averaging about 350ish. It needs new plumbing throughout, a new roof, kitchen update, 2 baths updated, floors and paint. The floor in one of the rooms is also slightly slanted. I don't know repairs but I estimated and hope 80K would cover that work and anything else necessary. It doesn't need to be gutted to the studs. I just want to know what I should sell this deal for. I could go with the 70% minus repairs formula and sell it for about $150K (that's also using the lowest comp and not considering that everything in this house will be brand new, a rehabber could probably pull the higher 350K) but at that number I'm making an insane amount of money for a wholesale, although I've heard of people making these profits on wholesale deals before. I just would like to know because even at the 150K mark, the rehabber is still going to have about a $105K spread before he pays everyone, I would think on a worst case he would pocket $60K after the transaction is done. Any advice is appreciated everyone. Thanks.
"I have the property contracted for $150K with the rehabber."
Then on January 4, you said you called the rehabber and told him you'd have to raise the price to $165K and then on January 5 you said you told the rehabber you'd have to raise the price again or sell to someone else.
If you "had the property contracted" with the rehabber back in December, how did you up the price on him twice in January? You had a contract...I can't imagine any experienced rehabber would sign a contract saying you could just raise the purchase price on your whim. So, how did you raise the price if you had a contract?
Regardless, just some friendly advice as a rehabber -- you're only as good as your word in this business. Even if you didn't have a contract with the rehabber (like you said you did), you at least had a verbal agreement with the rehabber to sell at $150K. And once you had a verbal agreement, to go back and raise the price twice (because you didn't do proper due diligence to begin with) is just flat-out unethical.
You said in other threads that you're only willing to work with serious, experienced rehabbers. I hate to tell you, but any truly serious, experienced rehabbers who read that you jacked up the price after coming to agreement aren't going to want to work with you.
Sorry, but you had an agreement that would have given you $50K and then got greedy after you realized you screwed up your due diligence and broke that agreement. In my opinion, that's not a great way to be starting out in this business...
Personally, I'd rather lose money on a deal than go back on my word, throw my integrity out the door and ruin my reputation. FWIW, I had this happen to me twice last month where I had verbal agreements with other investors to sell a property and got a higher offer before any contract was signed -- I kept my word in both cases and gave up about $20K doing it. I have no regrets.
Will you have me rolling on the floor laughing right now!!!!! That's how I feel, it's like everyday it gets better. Truly amazing! I must admit when you said if I can easily sell it for $250k then I'd be a bad businessman if I didn't it made sense. The problem was I was trying to sell it to my list of rehabbers. It's not worth rehabbing this property.. The builders working that neighborhood will pay the most. I'm happy with whatever we settle on. I never was trying to be greedy but I'm glad I didn't sell to the first bidder. If I've learned anything on this deal its to have an open mind to what can work in certain neighborhoods. If this house wasn't in a high end town it'd be a totally different story. And have a big list of buyers, including builders.
4% if I can find someone to pay 275k? Message me the address Deshone Drummond, I know a builder. This is why you shop it around, let the market determine the price!
Hi everyone,
I haven't been on here for a while and I just wanted to let everyone know what has happened. We went under contract last Monday on this property. I sold it to a builder in Westfield for $225,000. We close on the 30th. He's going to knockdown the house and build another on the lot. 10% is in escrow and the only contingency is clear title. Thanks again for everyone's input and advice on this deal and they'll be more to come. I am of course very thankful to start the year like this. God bless
Wow, congrats is in order. $125k wholesale profit (less a few fees I'm sure) is about the best I have ever heard of on a locked deal of only $100k. Talk about some serious mark-up profit.
Thank God we closed today. Net profit is $118,640. It's funny, we actually put the house directly next door under contract today. We were able to stop a foreclosure situation and get her some of her equity, when i was buying this one i noticed the totally unkept house next door. Pursued it and ended up getting it. It's amazing how God works these things. So this ones done. Thanks again for everyone's input. God bless.
Thanks so much Jenkins I appreciate it. Brandon thanks a lot. This is definitely an outlier but if you expect big you'll get big. You guys already know how I believe I got this deal so I do believe in supernatural things, I believe in amazing grace, but this just proves deals like this exist in today's market. Be encouraged and have faith, all hard work brings a profit.
Michael thank you my friend. That's one of the things I love most also!! The singles are good, the doubles are great, the triples are outstanding but there's no feeling like a home run. I guess the combination of all of these add up to a great career.
Deshone Drummond, it's funny you mentioned and acted on that home next door, the re-habber noticed that "slum" next door and thought it detracted from the hood. Glad you acted on that, just taught me a lesson! We have to get together with some of the New Jersey BP'ers at a diner. Congrats!
Hey Keith, yeah everyone who looked at it couldn't help but notice that house next door. Yes the builder and I are working together on the deal. It's worth more to him for obvious reasons and we agreed from the start not to bid against each other. We're acting as partners with me doing all the talking with the sellers since I had a rapport already built from the first time I introduced myself to them, told them I bought the house next door and asked of they'd be interested in a cash offer. That woman took my card that day and as she says put it right in her bible. The rest is history. They're going to need about 45 days to move out and we're giving them some upfront moving money.
Things are moving now! I just saw your pretty mug, giving props to Sean Terry on the first $17,500 you made... http://flip2freedomnow.com/ You going to his Atlanta show?