Victorville, CA · Member since 2017 · 37 posts · 15 votes
I have gotten a response from a yellow letter that I sent for a property that I found driving for dollars.
The property's potential ARV is $145K and just based on the outside of the property, it looks like there is about $35K worth of work.
I know this is not a lot to go on but as a wholesale deal, is it worth it to put it under contract for about $80K, contingent on seeing the inside and getting a more accurate ARV just to get the deal going?
Isn't that something you ask on the first phone call? That way you don't do a whole lot of leg work, get other people involved, create an urgent thread for everyone's advice, only to find out the seller is not on planet with their price?
This is after the fact, but a little research here on BP and YouTube for what makes a good wholesale deal will advance your RE Investing IQ quickly.
Ben W suggested the classic MAO (max allowable offer) "formula" for making offers (70% x ARV - rehab = MAO) - always keep this formula in mind!. Although in Cali, I think you could stand to go a little higher than 70%, but that's just me.
It appears you had a burst of unbridled enthusiasm as someone actually responded to your yellow letter! That's great. Even though the numbers don't work with her asking price, I say go take a look at the property and make some notes. It can't hurt to get into the game of evaluating rehab work.
Also, work on your comps for that home - This is all good practice for what is to come.
When all is said and done, make her an offer based on your numbers. The worst she can say is, "no". Like I said, it's all good practice.