Why cap it at $2500? If it is really worth $150k, and $20k in repairs, you should be able to sell it to investor for $85k. Give them a deal at $82,500 and pocket $10k.
I know when starting out you don't want anyone to think you're taking advantage of them. You don't have experience and don't think you're worth the $10k payout, but it's all about the numbers. If the property is still a sweet deal at $85k, why not take advantage of that?
How did you calculate repairs? If the repairs are not calculated correctly, it will be hard to wholesale. Also, you need to have accurate comps. Pending, sold and what did not sell, within that neighborhood. Have an exit strategy also. My two cents.
So it looks like there haven't been any properties that have sold within the last 6mos. within 1 mi radius of the subject property. Which means its a rental neighborhood. Make sure your cash buyer purchases rental aka buy and holds. If you have some lined up they'll be the ones to present this to. Good thing here is the 2br/1ba rents for $1K in that area so a potential $24K/yr gross for your end buyer...once the ugly gets all prettied.
Why cap it at $2500? If it is really worth $150k, and $20k in repairs, you should be able to sell it to investor for $85k. Give them a deal at $82,500 and pocket $10k.
I know when starting out you don't want anyone to think you're taking advantage of them. You don't have experience and don't think you're worth the $10k payout, but it's all about the numbers. If the property is still a sweet deal at $85k, why not take advantage of that?
Hey guys, Sorry I didnt update this sooner have been extremely busy. Anyway, this story is ongoing but I made some progress.
So I got the house under contract for 72,500 - after exhausting my potential buyers from REI club friends, I BUY HOUSES ads and craigslist responses as well as meeting with a member from here - they told me the price was too high and that two families would typically go for 55 - 65k max in this area.
By chance I was meeting my realtor in Jersey City in a bar/restaurant where she happened to know the owner - and he does lots of buy and hold real estate.
I told him I had a house under contract in Newark for 75k and he was immediately interested. I Showed him the next day and he said he could make the repairs in a week with his crew and have this rented out very quickly.
I also was very up front with him and told him other buyers said that the price was too high, he didnt care because with 1k per unit rent each month the numbers worked.
I assigned the contract, he put 3k in escrow in his attys office last week and we close within 4 weeks.(he needs a few weeks to get his financing in order)
Could not believe that this worked and that Im going to make 2500 with basically a few days work. Learned so much from this. Will let you know when this closes. Im writing more mailings as we speak....
I agree with the numbers too. If i had the money i would have bought the property myself. With the amount of rent paid and cost of the property, i believe it's a good investment. Good job on the find! How did you stumble across the property?
Yellow letters complete.com mailing to absentee owners in Essex county (about a dollar per mailing x 250 letters - first round). The sellers were very nice. I think what put them over the edge is when I went over there to talk about offer. I did it in person which I know helped, I brought with me a bunch of similar listings that had been on the market for 6 + months that did not need rehab work. The prices were in the 100k range.
I told them well, you can either let me buy it for 70k and Ill close in a month with cash with no realtor commission or you can fix it up on your own and have it sit on the market for minimum 6 mos. to a year if its able to sell at all. Houses move slow in that area. We agreed on 72.5k.
Yellowletterscomplete.com has a few packages and you buy the absentee owner list from them. I did my target county absentee owner as my criteria for the list, they did everything else. They send you the list after you confirm the letter so you can follow up and track calls.