Should I care or leave that up to the end buyer?

Question

Should I care about buying homes in awful condition and in poor locations as long as there is an end buyer that buys junk homes in poor areas? My thing is this. If someone buys and rehab a junker house in great condition surrounded by junk homes on that same street, who would want to live in a nice home in a poor area? Wouldn't that just bring the property value way down on the newly renovated house?

Jerryll Noorden · Answer

You are looking at this wrong.

It ia all about the numbers. ANY house has a number.

The "number" is what connects everything and everyone to the transaction.

If the house is in a crappy neighborhood, putting in marble bathrooms may not make sense... the NUMBERS won't allow it. If it is in a crappy neigborhood, section-8 may make sense, so you rehab the house based on the numbers, either rent, or flip profits... its about the numbers.

There will ALWAYS be buyers (the right biuers) as long as the numbers make sense... as long as the deal makes sense.

And yes you DO need to care about condition and loication, wholesaling or not... but again.. all that is factored into the numbers. No matter how crappy something is, a job is... most people have a "number". There is no way I am going to clean toilets in Disneyworld as a job...  but I may change my mind if they pay me $1M/toilet... right?

Everything has a number, and everything is died up in that number. The number reflects all the issues, characteristics of the deal including crappiness, location condition, worj, risk, effort, vacancy rate desirability... everything.

Simplify this, not complicate this. Leave emotions behind and ONLY look at the numbers.

Michael J. · Answer

I would work on getting the rest of the houses under contract and seeing if the end buyer wants those as well.  Somebody will eventually do it if you don't.

Will Barnard · Answer

You should care about all details of all homes you plan to offer on as the details are how you come up with an offer price. I don't buy in crappy neighborhoods because the exit is more difficult and there are many other negative factors to them. But that's me, others specialize and/or are successful in those types of markets. To each his own as it goes. As Jerryll pointed out, the details generate the numbers and the offer amount would have to be at a point that takes into consideration the comps, the rehab amount, the buyer's pool, the current local market conditions, etc.

Scott E. · Answer

If you're wholesaling, you shouldn't care about condition or location if you have buyers who are looking for this product in this location.

You're not the one who is closing on the deal and who has to deal with these problems, your buyer is.

Jerryll Noorden · Answer

While most investors give up here... the select few will thrive here using creative strategies to get the deal to work.

BUT, it is really difficult to make a deal work.... and even more difficult to say "I need to walk away". And you are able to do that, so good on you my man!

Never be desperate to make a deal.

Chris Seveney · Answer

are you referring to gentrification? If you buy homes in a low income area and do not rehab them, you will have a hard time making money just by reselling them as who is your end buyer? You would need to owner finance as borrowers most likely cannot get financing based on property condition and other factors. Plus those areas have higher crime so more of a chance home may be vandalized and incur more damage

Bruce Woodruff · Answer

That has been my model for years. There is only one condition....the area has to be in the process of, moving towards 'gentrification'. At least a few other investors or forward looking homeowners have to be fixing up as well...

If you can hit this double-whammy, you are golden.

Jerryll Noorden · Answer

No no, don't feel bad. That is how it goes my dude. I would still make them an offer though.... just make an offer based on the numbers it works.

Check this out...

10 dollars bro!

That was how much we were willing to pay for it. If they didn't think it was fair, they could have gone elsewhere right? They picked us.

We are honest transparent straight shooters and.... absolutely not desperate. That is attractive to people... go figure.

Either walk away if you really don't want to deal with it... or make them an offer that makes it worth your while and go from there...

Either way.. there is NOTHING wrong with walking away.

Should I care or leave that up to the end buyer?

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