Attempting to sell at 90% of ARV

Flipper/Rehabber · Bloomfield CT · Member since 2020 · 1k+ posts · 408 votes

I remain eternally confused as to why a wholesaler would approach any investor with a deal that is at 90% of after repair value hoping to be successful. What kind of koolaid are wholesalers drinking nowadays?

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Brandon VukelichBusiness Member

Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 547 posts · 457 votes

@James McGovern usually it is their ignorance, incompetence, greed or a combo of all three.

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Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
1y
@James McGovern We repeatedly run into the same issue trying to work with wholesalers. We don't have an established network for it honestly. Almost everything is overpriced for the amount rehab required (flip or BRRRR). We gave up on the wholesaler front, and recently closed on a MLS listed property. Took 2 months of verbal negotiation, but the seller came to reality. It was an OOS LLC that owned it. Seller ran the property into the ground. Zero maintenance since 2017, probably longer.

There's a repairable garage and destroyed AC in that jungle.

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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
1y
Some wholesalers are completely clueless. If it is turnkey maybe they can get 90% of the ARV but that is a tall task.
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- Kyle Geoghagan
  Specialist · FL · Member since 2022 · 37 posts · 22 votes
  1y
  Quote from @Caleb Brown:
  
  Some wholesalers are completely clueless. If it is turnkey maybe they can get 90% of the ARV but that is a tall task.
  
  Not even a turnkey property will get 90% of the ARV! With a flipper's closing costs, holding costs, the flipper's profit, the wholesaler's profit and more it would be impossible unless a buyer just wanted to do it for the fun of it!
  2 Reply
- Caleb Brown
  Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
  1y
  Quote from @Kyle Geoghagan:
  
  Quote from @Caleb Brown:
  
  Some wholesalers are completely clueless. If it is turnkey maybe they can get 90% of the ARV but that is a tall task.
  
  Not even a turnkey property will get 90% of the ARV! With a flipper's closing costs, holding costs, the flipper's profit, the wholesaler's profit and more it would be impossible unless a buyer just wanted to do it for the fun of it!
  
  Agreed. I think for someone buying turnkey they would need to be holding instead of flipping the property. For turnkey 80% is probably the top end. There might be certain pockets in larger cities where people are OK paying up higher than that.
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- Kyle Geoghagan
  Specialist · FL · Member since 2022 · 37 posts · 22 votes
  1y
  Quote from @Caleb Brown:
  
  Quote from @Kyle Geoghagan:
  
  Quote from @Caleb Brown:
  
  Some wholesalers are completely clueless. If it is turnkey maybe they can get 90% of the ARV but that is a tall task.
  
  Not even a turnkey property will get 90% of the ARV! With a flipper's closing costs, holding costs, the flipper's profit, the wholesaler's profit and more it would be impossible unless a buyer just wanted to do it for the fun of it!
  
  Agreed. I think for someone buying turnkey they would need to be holding instead of flipping the property. For turnkey 80% is probably the top end. There might be certain pockets in larger cities where people are OK paying up higher than that.
  Definitely, it would not make sense to be anything other than a buy and hold. Even then it would need to be at a discount for the investor unless they planned on holding it very long term. But every market is different and it depends on a variety of things like for starters what the investor is aiming for - the cap rate or cash flow, or maybe both
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Brandon VukelichBusiness Member
Real Estate Broker · Tacoma, WA: 🏢 27 LTRs 🏡 3 STRs · Member since 2018 · 547 posts · 457 votes
1y
@James McGovern usually it is their ignorance, incompetence, greed or a combo of all three.
Broker at Multifamily Properties519 Reviews
Website View Page
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Nika FouquetPro Member
Investor · Los Angeles · Member since 2022 · 8 posts · 1 vote
1y
Feeling your pain. 90% of ARV every time!!
And I love the gaslighting that occurs. Pet Peeves:

Why did they think including comps for 2140 sq ft is acceptable to include when the listed property is 1500 sq ft.?

Why do they think including a property that sold 1 yr ago is ok?

Why do they include properties that are in a different zip code?

Do they even have a clue as to definition of "wholesale"??
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