Investor · Bartlett, IL · Member since 2014 · 170 posts · 10 votes
Hello, I'm new to wholesaling and have a lead on a property with an out of state owner who has a long-term tenant. The owner tells me they are motivated to sell and willing to considerably discount the property for a fast transaction, without realtors, commissions, closing costs, etc. Being new to this, this isn't the type of transaction I envisioned for my first wholesale deal but it seems to be an opportunity since there's motivation and some equity. My research indicates the owner owes around 100K and the property is worth conservatively about 125K in good condition. Could there be a deal here? What questions should I be asking the seller? Since my end buyer would likely be a buy and hold investor rather than a rehab investor, what factors would be looked at in determining if there's good deal here? Thanks in advance for input.
Investor · Santa Rosa, CA · Member since 2012 · 402 posts · 96 votes
12y
It sounds like you're right, the numbers don't seem right for a flip. My true response, and sorry if this doesnt help, is you should be asking these questions to your buyer(s). Legally you cant make offers for someone else without a license but you can ask advice and then negotiate on your own behalf.
Seems like an easy offer if you think you can flip the contract, offer what they owe.
Real Estate Investor · Cypress, CA · Member since 2013 · 877 posts · 94 votes
12y
@Jonathan Wheeler welcome Jonathan. You will need to look at rent roll, tax returns, leases of the tenants to get an ideal picture of how this property is performing. Why is he so motivated? when was the last time the property was updated?
@Christopher Hunter thanks for the input. I believe most of the motivation lies in the fact that the seller is located thousands of miles away from the property. I've inquired about the terms of the current lease and any updates to the property. I must admit that my focus has been mainly on vacant properties so this lead caught me somewhat off guard. With that said, I'm willing to do whatever is necessary to close my first deal if there's something here.
Real Estate Investor · Phoenix, AZ · Member since 2013 · 111 posts · 76 votes
12y
@Jonathan Wheeler Why would this be a good deal? Definitely not a good deal for a fix and flip based on the numbers provided. I have wholesaled rentals to fix n flip investors, but the leases were month 2 month so after close, the investor gave the tenants 30 days notice. Regardless, there is not enough profit in this deal as stated for a fix n flip. As far as being good for a buy n hold, my instinct says its not a good deal. What is the lease term, what is the rent the tenant is paying, and what is the going rent for similar properties in the area? Those are needed to know if this makes a good buy n hold. Of course, you should also know what your buyers are looking for wrt a buy n hold (ie. cash flow per door, cap rate, etc).
Investor · Bartlett, IL · Member since 2014 · 170 posts · 10 votes
12y
@Account Closed Clearly this wouldn't be a fix and flip deal. The property has been occupied long-term by a tenant and the only type of deal that might make sense here would be a buy and hold. Not having any experience with this, I'm trying to determine what would make this a good deal for a buy and hold investor and if that's even feasible. You've given me some things to consider. Thanks.
Real Estate Investor · Cypress, CA · Member since 2013 · 877 posts · 94 votes
12y
@Jonathan Wheeler you need to find out much of the hidden cost if you can. Is there a property mannager, how much do that get paid? Who pays what bills?