Columbus Ohio · Member since 2016 · 19 posts · 3 votes
My mother has a rental property that she let extended family stay in and they completely trashed the place and didn't pay for a number of months. My mother lives out of state and can not pay the necessary amount to get the mortgage caught up. So I have been looking to start my wholesale journey and was wondering if I was looking at this possible deal correctly.
So I would take the ARV (ARV is the same as comps correct?) and subtract it by 30% and thats my price I look to offer the buyer. Then I subtract the amount of mortgage owned and rehab costs to get a number. Then I subtract that number buy the amount of money I want to make and thats the number I would offer my mother for the house. Is that correct? Thank you all for your help on understanding the numbers.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Jesse Watts How about you find an agent, get it listed on the mls where all the cash buyers will see it, and get the Best Net for your mother.....instead of taking a bunch of money out of her pocket to put a little bit in yours?
Hey, also fairly new, but what I have found that works for deal analysis is: ARV ( I avg 5 comps sold within 12 months) x 70%. Then subtract the approximate repairs from THAT number. Lastly, fit in the assignment fee. And that's how I find a good buy number. That's going to be your max allowable offer. For instance, 200k ARV x 70% = 140k - repairs (which is MAYBE AROUND $20/ sq ft?) [RANDOM NUMBER 24k] Reno costs. You desire, say, a 6k Assignment Fee. Your max buy price is 110k. So offer 89/90k? Negotiate to a good purchase number. Say you land at 90k.
Not sure how mortgage owed would factor in. I'm sure that would increase the owner's sell price, because they must make at least what is owed on the home, and whatever remains is profit for the seller/home owner. You get 6k, the buyer/investor gets the home at the buy price (Incl. your 6k fee) and puts in 25k in repairs. The home sells for 200k ideally, 96k buy price + 25k repairs = costs 121k/ sell price of 200k = Happy Investor.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
5y
@Jesse Watts How about you find an agent, get it listed on the mls where all the cash buyers will see it, and get the Best Net for your mother.....instead of taking a bunch of money out of her pocket to put a little bit in yours?
Investor · Wellington, KS · Member since 2016 · 256 posts · 188 votes
5y
@Jesse Watts. Not intending to be overly harsh but why would you rip off your own mother like that by buying from her below market value? I agree with @Wayne Brooks, list it through an agent on MLS for top dollar.
Rental Property Investor · Fort Wayne, IN · Member since 2019 · 132 posts · 51 votes
5y
@DJ M. It is not acceptable to refer to other users on this forum using derogatory terms. You don't know all the details, but you do know how to make a positive impact on this community. Next time, go and do that.
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
5y
@Jesse Watts Just because a property needs repair doesn't mean it's not a good candidate for MLS.
By definition and MLS listing will expose the property to the largest number of buyers and that's how you get the most money for your Mom.
Needing repairs means it may not qualify for a standard FHA, USDA or VA loan but there are other options. An FHA 203K construction loan is one option. If all the essential systems work (plumbing, electrical, HVAC, etc), a conventional loan could work. There's also the Fannie Mae Homestyle renovation loan or even a hard money/cash purchase.
If Mom is behind on the mortgage, your job is to get the home sold before it goes to foreclosure, so I'd look for a good agent in your area ASAP.