My first wholesale?

Question

I've come across a good deal that I don't have the resources to do myself. It's a 3 BR 2 BA + GAR 1450 sf in a really nice neighborhood in Kennewick WA.  It's been kept up well but the roof is needing replaced (no current leaks, recently patched) and it needs all new carpet.

It's worth 125k as it sits. 8k in improvements would push the value to 145k. The owners owe 93k and want 10k to walk with so I can get iyt for 103k.

On the rental market with just new carpet it would bring $1,000 to $11,000 a month.

Based on those numbers is it worth getting involved in and what would I stand to make buy finding a buyer.

Thanks in advance for your input.

Paul Timmins · Answer

@David Fritch

Welcome.

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you can get first crack at some deals.

Locate and network with the 3 most active REO brokers you want a relationship to know what is coming on the market.

Locate and network with the guys boarding up and winterizing properties they get a list on Monday of properties to clear out and set the lockbox codes they know the condition of the properties.

Good Luck

Paul

Brandon Sturgill · Answer

Looks mediocre for a flip...if your ARV is 145k (best case scenario), and your repairs are truly 8k (which I have never seen happen in a 1500sq. ft. home)...70% of your ARV minus your projected rehab (145 x.7-8k)=93.5k...buying this house for 103k is a mistake. Though I am sure some more folks will chime in.

It would be more realistic to say your ARV is 10-20% lower and your rehab costs are closer to 12k...you can even project your %ARV to 60-65 for wiggle room. 135k x.65-12k= 82.5k. I think you should get this house for somewhere in the high 70's low 80's...but that's just one opinion.

Cash flowing is a different game....unsure with the info provided.

Chris Music · Answer

I agree with Brandon, you are cutting your margins pretty thin, given that it is your first one you would be wise to make very conservative estimates. Probably not enough of a spread for a rehabber, but a cashflow investor might not mind paying a little more if it's in a good rental area.

Tony Wooten · Answer

Good question! I'm a newbie so I'm just going to sit in the corner and take notes.

David Fritch · Answer

Brandon, thank you for your comments. I don't see that it would be a good flip. I'm thinking it could be a good rental. What info would you need to determine that?

My first wholesale?

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