Wholesaling

3 Replies

I have 2 questions, 

1.  Is there such a thing as flipping a home that does not need any repairs? if so, what is the formula? 

2. I am in discussions with a seller who has a mortgage balance of $102,808.00 the market value is $138,900, how can I structure this deal to completely payoff the bank, using 65% of the ARV or market value.

Kelvin    

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Your questions are interesting and I'll take a stab at an answer.  First, certainly there are situations that could arise to make it possible to flip a house where repairs are not required.  A homeowner desperate to sell for whatever reason is one possibility.  You may find this kind of situation on  rare occasions, but it is not the norm.

Kelvin, for question 2, carefully evaluate the numbers. If a lender lends 65% ARV, factor in cost of repairs, loan fees, etc. to determine if this deal makes mathematical sense. If you are new to investing, take time to study the deal evaluation process. The Bigger Pockets website is a valuable source of information for new investors.

Best of luck. 

Originally posted by @Kelvin Young sr :

I have 2 questions, 

1.  Is there such a thing as flipping a home that does not need any repairs? if so, what is the formula? 

2. I am in discussions with a seller who has a mortgage balance of $102,808.00 the market value is $138,900, how can I structure this deal to completely payoff the bank, using 65% of the ARV or market value.

Kelvin    

 1) Well that all depends on the price. If it doesn't need repairs a seller will generally (rightfully so) expect closer to market value, so wholesaling in the traditional high equity situation would be a no go. One of the better ways to flip a home like that is to put in owner financing and pass it off to a buyer who will pay a higher down payment and higher monthly payment than you offered the seller. 

2) That's really tough (in my experience) to do as no cash buyer is going to be willing to put down 74% of the market value without even factoring repairs/up to speeds (up to speeds is a umbrella term I use for things like painting, carpet cleaning/removal, etc). The best way to handle that deal would be a subject-to if the property is in good condition. However, you mentioned paying off the bank in a lump sum, so that strategy wouldn't really work here.